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The US Department of Homeland Security (DHS) is interested in acquiring technological solutions that can trace new cryptocurrencies, such as Zcash and Monero.
According to a pre-solicitation document [PDF]DHS wants to know if this is possible before submitting an official solicitation request later on the line.
DHS stated that "previous efforts have faced the analysis of Bitcoin", but now the agency and the forces under its supervision are examining similar cryptocurrency analytical solutions that can be used to trace the so-called coins of privacy: cryptocurrencies that support anonymous transactions.
"A key feature behind these new blockchain platforms that is often emphasized is the ability to maintain anonymity and privacy protection," said the DHS document. "Even if these characteristics are desirable, there is also an irresistible interest in tracing and understanding illegal blockchain transactions and actions".
"This proposal requires solutions that allow the investigation of the forces of the order to perform forensic analysis on blockchain transactions," added the DHS.
The DHS expressly mentions the Zcash and Monero privacy coins in its pre-solicitation request. In recent years, Monero was the second most famous cryptocurrency in the Dark Web, after Bitcoin.
The support for anonymous transactions, but also its low difficulty in mining, has made it extremely popular even with cryptographic malware operators, being the preferred cryptocurrency extracted from most cryptojacking botnets.
Previously, the US order forces have been very successful in tracking Bitcoin transactions. While Bitcoin is cryptographically protected from external tampering, Bitcoin transactions are not private, being recorded in a public ledger.
By tracking these transactions, the US authorities, with the help of the private sector, were able to determine that 95% of all ransomware redemption payments were cashed in and converted into fiat currency through the exchange of cryptocurrency BTC- is. The US authorities issued an international arrest warrant for the owner of the BTC-e portal, but later lost an extradition battle with Russia.
Now, if DHS receives positive feedback and its agents get their hands on tools capable of tracking Monero transactions through exchanges and fiat currency accounts, a series of arrests can be expected to come in the next few years. Nonetheless, all this depends on the ability of the private sector to track and demystify the transactions of some of these privacy currencies, which at the moment are highly unlikely.
