Do you think your cryptocurrency transactions are anonymous? The US government may be able to monitor Monero


One of the biggest strengths of cryptocurrency is that it is mostly out of reach for world governments, providing a universal option through which to avoid banks and fiat currencies altogether. This isn’t entirely true of all forms of encryption, however, and one of the more privacy-focused may have just been opened to prying eyes. Intelligence firm CipherTrace claims to have developed a tool capable of tracking Monero cryptocurrency transactions and that it will be provided exclusively to the US Department of Homeland Security.

Is Monero’s privacy compromised?

Although cryptocurrency transactions are often considered anonymous and untraceable by laymen, this has never been entirely true. Security researchers have always had at least some ability to track as blockchain transactions must be transparent for the system to work. Investigators can track down wallet addresses listed in these transactions, sometimes exposing the owner when he makes a mistake such as using a personal email address to register a wallet-linked account on a cryptocurrency exchange. Portfolio balances are also public and the amounts they contain can sometimes be indicative.

Monero is an exception in the world of cryptocurrency transactions. It was specifically designed as a non-transparent intermediate step to allow cryptocurrency holders to swap one type for another and essentially break any investigation trail based on wallet address tracking. Unsurprisingly, it has been heavily taken over by cybercriminals and those looking to purchase products and services on the dark web.

Dave Jevans, CEO of CipherTrace, says his company has developed the first tool capable of unmasking Monero cryptocurrency transactions. CipherTrace developed the tool as part of a contract with the DHS Science & Technology Directorate, which means that the US would (at least initially) have the only ability to peer Monero transactions.

Although CipherTrace was not entirely open to the technical capabilities of the tracking tool, it said a goal of use would be tracking the sources of ransomware requests. The company also chose to disclose that it would not have the ability to be used for anti-money laundering purposes, at least not initially.

With no technical details available, the cryptocurrency community has generally been skeptical of the tool’s capabilities. Justin Ehrenhofer, organizer of the Monero Community Working Group, believes that the ability to track will be even more limited than other types of cryptography such as Bitcoin.

Critics have emphasized the potential for human rights violations if this technology were adopted by dictatorships and repressive regimes, and also expressed the belief that small transactions should be kept private if they are not substantial enough to be part of a criminal investigation. .

It appears that the CipherTrace tool does not clearly expose wallet IDs and transactions the way they can simply be searched with Bitcoin and similar options. Jevans described it as a “probabilistic” model that will give a certain percentage of confidence that a particular address or transaction has been identified and warned that the tool should only provide clues for law enforcement to follow.

It would appear that this will not discourage cybercriminals who are completely disconnecting their identities from their cryptocurrency transactions; There seems to be no shortage of these as Bitcoin is even more frequently used for cybercrime purposes than Monero. These criminals often operate from countries that have no extradition treaties with the United States or from a country that simply does not extradite its citizens. The primary use for law enforcement would appear to be in cases where criminals are granted an additional automated level of anonymity using Monero, but otherwise make mistakes and leave traces on which they can be tracked.

Is the check good for cryptocurrency transactions?

CipherTrace also analyzed the positive benefits of such a tool, noting it could make Monero more readily available. Due to its specific association with criminal activity and issues with compliance standards, the cryptocurrency has been removed or banned from a number of popular exchanges. Japan made headlines in 2018 for banning it directly from the country (along with cryptocurrency transactions using other similar “privacy coins”), although such bans are extremely difficult to enforce in terms of individual use.

In the consumer’s end, any benefits seen by these tools would assume that they remain in the hands of properly regulated law enforcement and are used strictly to enforce the law in cases such as ransomware attacks. If these tracking methods prove effective and become available to the general public, Monero loses its main strength and probably much of its value.

Although CipherTrace was not entirely available on technical capabilities, he said the goal would be to trace the sources of #ransomware requests. #privacy #respectdata

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The 2018 DHS contract with CipherTrace also included exploring ways to similarly monitor ZCash, another privacy-focused coin, but it wasn’t specifically mentioned in the company’s statements to the press. The main difference between ZCash and Monero is that ZCash allows users to choose to make certain transaction information public if they wish. The security of ZCash also depends on a single key created by a select group of people, which introduces potential corruption issues and catastrophic crashes not present with other types of cryptocurrency transactions.

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