How US Law Enforcement is Planning to Track Monero


CipherTrace is a cryptocurrency analytics firm based om California. Recently they have made the announcement about a tracking tool they developed for Monero. The tool allows people to trace transactions made with the privacy-centric Monero coin. The company has already contracted the tool to the U.S. Department of Homeland Security.

The Cryptocurrency War

In recent times Monero has gained significant traction. Being based on privacy, Monero is attractive to many different groups of people. This is the only other cryptocurrency, pioneered so well to rival Bitcoin. The dark-net community picked up on the anonymity aspects of the coin fairly. The busts related to authorities tracking bitcoin transactions only accelerated its growth. Currently, Monero is on the path to become the most popular currency on the dark-net.

Infact, bitcoin cannot match Monero design. The coin boasts a wide variety of features such as stealth addresses. Bitcoin transactions can be way easier due to the open blockchain nature of the currency. Every bitcoin can be traced to its origins. This simply does not stand true with Monero. Multiple law enforcement agencies figured out ways to link transactions to the dark-net.

The only way for bitcoin receivers to stay secure and anonymous is by creating a new wallet for every transaction. Unless people decide to use this inefficient tactic, they will not be safe. The open nature of bitcoins blockchain poses a threat to users on the dark-net. Law enforcement has been tracking bitcoins blockchain for years now.

On the other hand, Monro ensure that tracking is not possible. When funds are sent to a wallet, the receiver can's know the sender unless he is informed. It is not possible to trace transactions and is the reason Monero is considered a privacy coin. Moneros stealth addressing made it a great currency for cyber-criminals around the dark-net.

Tracing Monero Transactions

CipherTrace stated some new developments in a recent press release. The company mentioned its goal to assist law enforcement with tracking Monero transactions. This goal was set in order to assist with the reduction of criminal networks around the world.

The company mentioned in the press release how Monero has grown in the dark-net scene. It quickly became the second most popular cryptocurrency on the dark-net. Figures indicate that over 50% of dark-net marketplaces accept Monero. The integration of Monero across the dark-net signifies risks that come with bitcoin.

All the privacy features that come with Monero got law enforcement thinking. New ways to track transactions on the Monero blockchain were being developed. Law enforcement was fully aware of the criminal interest surrounding Monero.

Ring signatures and mixers are used to mix transactions. When third party actors try to figure out the source of funds it is nearly impossible. It appears as if multiple users participated in the transaction. This feature makes it very hard if not impossible for law enforcement to identify suck coins.

CipherTrace has a contract with the DHS Science & Technology Directorate. They both developed a set of tools that allow the exploration and search of transactions. Visualization tools can also be used to view Monero transactions. The tool-set will only work if transaction flows will incorporate CipherTrace's tool.

The new tool met law enforcement demands and is going to be implemented in the near future. Exchanges and other financial firms that deal with Monero are also attracted to the tool. The tool is meant to help such companies distinguish suspicious transaction. This will significantly reduce the exchange of illegal cryptocurrency. KYC/AML compliance will be reinforced with this tool.

The company is intending to improve the tool and add more functionality in the near future. The already developed tool-set will target a wider range of stakeholders. Many features are being actively developed and will be added to the tool-set. Transaction clustering, as well as wallet identification are the next big features. Exchange attribution is also being worked on.

The Future of CipherTrace

Dave Jevans, CEO of CipherTrace spoke to The Decrypt Daily. He revealed the effectiveness and his opinion on the toolkit targeting Monero tracing.

Dave admitted how difficult it was to trace Monero transaction. He compared it to bitcoin and mentioned it was miles more complicated. He mentioned that the current approaches will go a long way and will provide law enforcement a way to track Monero. This tool should be able to provide law enforcement enough data to conduct investigations.

The CEO also mentioned that the Monero tracing framework will function on probability. He stated that the firm does not have any means to identify the actual individuals behind transactions.