Privacy and anonymity are the main advantages of cryptocurrencies, but because of the transparency of blockchain technology, cryptocurrency transactions are not as anonymous as some think. Bitcoin (BTC) and other cryptocurrencies are rather pseudo-anonymous, as every transaction in a blockchain network is transparent and wallet addresses can be traced back to their origin.
For example, cryptocurrency intelligence company CipherTrace can track hundreds of cryptocurrency transactions by analyzing wallet addresses, exchanging information, and entering into smart contracts. John Jefferies, the chief financial analyst at CipherTrace, told Cointelegraph so The company is currently able to track more than 800 cryptocurrencies to aid criminal investigation. This is extremely relevant as recent discoveries show that cryptocurrency-related crimes already resulted in $ 1.4 billion in theft, hacking and fraud in the first half of this year.
Can Monero be tracked now?
While Bitcoin has been ranked the number one crypto option among criminals, A large number of transactions in dark markets are carried out using the data protection currency Monero (XMR). Because of this, law enforcement agencies were keen to find a way to track down Monero. Although there was previously no tool to track Monero transactions, Dave Jevans, the CEO of CipherTrace, mentioned that the company developed the first tool to track Monero transactions.
According to Jevans, the tool that has been in development for more than a year is It is used by the U.S. Department of Homeland Security to track Monero transactions. He noted that CipherTrace’s recent contract with the Department of Homeland Security’s Science and Technology Directorate resulted in the development of forensic tools for law enforcement and government agencies to track Monero transaction flows for businesses. criminal investigation:
“The tools include transaction visualization, exploration and search tools for Monero transaction streams that have been built into the CipherTrace inspector’s financial research product.”
A game changer against those who use Monero for crime
In particular, Jefferies of CipherTrace stated that the tools allow tracking of stolen Monero or those used in illegal transactions. Although the product is not yet suitable for anti-money laundering purposes, Jefferies mentioned that Monero ransomware cases can be traced back to their sources. This is noteworthy in that it was mentioned that the criminals behind the ransomware are switching from Bitcoin to Monero to better protect their identities.
Jefferies said the tool will allow law enforcement officers to narrow down ransomware cases to a few different cryptocurrency addresses. Although Jefferies was unable to provide the exact number of transactions being tracked, he disclosed that the tool has been validated for a large number of Monero transactions:
“The tool shows transaction flow. Like all CipherTrace products, it protects user privacy by not tracking individual user identities.” Law enforcement agencies do this based on our analysis and legitimate court orders. “
Jefferies also noted that the instruments help secure cryptocurrency exchanges, OTC trading desks, and mutual funds that do not accept Monero from illegal sources. This could very well be a game changer for Monero, which has recently been delisted from various exchanges due to poor compliance regulations and a general lack of transparency compared to other cryptocurrencies.
The crypto community speaks
Although the new CipherTrace tool will help fight crime related to Monero, members of the crypto community remain skeptical. Justin Ehrenhofer, organizer of the Monero Community Task Force and compliance analyst at DV Chain, a cryptocurrency trading organization, told Cointelegraph: While you might not be surprised by CipherTrace’s Monero tracking tool, you haven’t yet received any specific information on what the team has achieved.::
“We believe CipherTrace has come up with a novel way of tracking Monero transactions, but I’m not entirely sure what they can do. So it’s difficult to interpret the legitimacy of their claims. To say that they have a way of viewing Monero transactions. That doesn’t mean it’s now as transparent as Bitcoin transactions. “
Ehrenhofer also noted that it is extremely unlikely that CipherTrace can track Monero to the same extent that they can track other cryptocurrencies. “”Without specific information, all speculation is just that, speculationHe added. In addition, he noted that the investigation will continue to improve Monero’s privacy capabilities, regardless of actions taken by CipherTrace or other companies trying the same techniques.
Although there are several privacy coins, XMR remains the largest and one of the most unique because of its advanced security features. Ehrenhofer stated that the main technology behind Monero is RingCT, a system that combines circular signature and confidential transaction cryptography. “”This means that I can look at a blockchain network on my computer and give the impression that I am spending other people’s money without their actual participation“he said. Ultimately, Monero makes it possible to hide all parties to a transaction, including the details of the sender, recipient and amount.
With that in mind, Ehrenhofer mentioned that Monero was specifically designed to withstand scrutiny by governments and others trying to monitor it. So keep relying on using Monero: “Since we have no reason to believe that there are new ways to track Monero transactions or any indications of their effectiveness, Monero users can continue to conduct transactions with confidence.Jefferies disagrees, however, and notes that the tools CipherTrace developed for the American authorities laid the groundwork for more advanced investigative tools in the future that law enforcement officers will use in Monero transactions. .
Skepticism aside, Some cryptocurrency enthusiasts believe that financial surveillance tools such as those developed by CipherTrace violate human rights. Alex Gladstein, strategy director of the Human Rights Foundation, a non-profit organization, argued recently on the podcast The blockchain debate that blockchain analytics firms are downright bad for Bitcoin and other cryptocurrencies.
Gladstein, who was accompanied by Jevans on the show, He stated that the provision of information about cryptocurrency transactions by government officials enables governments to spy on individuals’ financial transaction data. He claimed that “financial watchdog” companies like CipherTrace, You might even choose to work with dictatorships to give those governments more control over their citizens.::
“I understand we have banking secrecy, but transactions under $ 10,000 must remain private. This is not supposed to be passed on to the government, but if Jevan’s company has its way it will go away and even small microtransactions will become for the US -Government or worse for dictatorships a simple game. “
While this is an extreme example, there are some practical advantages to consider. Ryan Taylor, the CEO of Dash – another privacy-focused cryptocurrency – told Cointelegraph that there is a big difference between authorities tracking Monero transactions and personal transactions:
“Not wanting your spouse to find out you bought jewelry for your anniversary is very different from the government not tracking your illegal drug empire. Most people are just looking for ‘enough’ privacy, and I don’t think so This is possible Professional tracking affects most people significantly. “