CipherTrace delivers Monero tracking tool to U.S. Homeland Security

Fibo Quantum

  • Crypto intelligence company CipherTrace is claiming to have developed tools for tracking Monero transactions.
  • Tracking tools were developed in conjunction with the U.S. Department of Homeland Security.

In a press release, CipherTrace has announced that it has successfully developed “tools to track” Monero (XMR) transactions. The tool was developed as part of a contract with the U.S. Department of Homeland Security (DHS), through its DHS Science and Technology Directorate branch.

According to the statement, the traceability tools for Monero have been created with the main objective of making them work as a forensic means of conducting criminal investigations. CipherTrace claims it can explore Monero transactions in the following ways: transaction search and scanner, as well as a Monero transaction flow visualization. The tools, CipherTrace claims, will now become part of its financial investigation product known as CipherTrace’s Insperctor:

This provides ways to track stolen Monero currencies or Monero currencies used in illegal transactions. It also helps assure cryptocurrency exchanges, OTC trading desks, investment funds and custody providers that they do not accept Monero from illicit sources and investigate Monero received from potentially illicit sources and take appropriate actions to stay in compliance.

Did the king of privacy coins, Monero, died?

Monero has been rated by international agencies, such Europol, as one of the few cryptocurrencies whose transactions are untraceable. Therefore, it has received negative attention from governments that have established measures for exchanges to remove Monero, Zcash, Komodo, among other privacy coins.

The advance of CipherTrace is the result of an investment made by the U.S. government to try to “de-anonymize” coins like Monero. Data provided by the intelligence firm says that 45% of all transactions on the dark net are paid for with transactions in Monero. The privacy coin uses ring signatures that allow the source of a transaction to remain hidden by cover it among other transactions. CipherTrace CEO Dave Jevans stated the following:

Monero (XMR) is one of the most privacy-oriented cryptocurrencies. Our research and development team worked for a year on developing techniques for providing financial investigators with analysis tools. There is much work still to be done, but CipherTrace is proud to announce the world’s first Monero tracing capability. We are grateful for the support of the Department of Homeland Security’s Science & Technology Directorate on this project.

However, there is skepticism in the crypto community. After the announcement, users have questioned the traceability tool and its capabilities. Others have been critical of tools that have the potential to undermine users’ privacy. Via Reddit, u/bawdyanarchist wrote:

Yes they probably have some limited capabilities in certain circumstances to correlate sets of outputs together. Namely by combining low probability transaction graphs, with off chain heuristics, and in some cases poisoned outputs.

But no, they can’t “track” it in any sense qualitatively like Bitcoin (or the fake privacy coins), which are 99% open book. At best they have a very small subset of outputs that have some statistical probability of correlation. Most of it can be easily mitigated with basic opsec.