CipherTrace Launches Monero-Tracing Tool
On 31st August 2020, CipherTrace, a leading cryptocurrency intelligence company that works with global law enforcement and regulators, announced the launch of the world’s first Monero tracing tool.
According to Dave Jevans – CipherTrace’s CEO, the new Monero tracing capabilities would help the U.S. Department of Homeland Security (DHS) in crime investigations. The recently developed tools have been in development for over a year and would support DHS to track transactions of notoriously difficult-to-trace privacy coin Monero (XMR).
Since Monero was created in 2014, it has been the second most-used and favorite cryptocurrency for criminal activities after Bitcoin. Monero got its unmatched privacy from its unique design, which ensures user anonymity using features like enforced privacy, bulletproofs, stealth (one-time) addresses, and ring signatures.
Currently, over 45% of darknet markets are using Monero and this has aroused and raised the interest of law enforcement in Monero tracing. Fortunately, CipherTrace claims that its tool can “trace and visualize Monero transaction flows for criminal investigations.”
The intelligent company added that the tracing tools “include transaction search, exploration, and visualization tools for Monero transaction flows that have been integrated with CipherTrace’s Inspector financial investigations product.”
Jefferies from CipherTrace explained that these Monero tracing capabilities come with multifaceted usefulness. It will enable the DHS to track stolen Monero currencies or Monero currencies used in illegal transactions. More so, it will help cryptocurrency exchanges, OTC trading desks, investment funds, and custody providers to avoid Monero currencies from illicit sources, investigate Monero currencies received from potentially illegal sources, and enforce compliance.
Though the Monero tracing tools are not suitable for Anti-Money Laundering purposes yet, Jefferies stated that they are useful against ransomware. He said that ransomware cases involving Monero can now be traced back to their sources.
Jefferies added that the tool will enable law enforcement officials to narrow ransomware cases down to a couple of different crypto addresses. Although Jefferies couldn’t ascertain the exact number of Monero transactions traced to date, he mentioned that the product has indeed been validated across a large number of Monero transactions:
“The tool shows transaction flows. Like all CipherTrace products, it protects user privacy by not tracing individual user identities. That’s what law enforcement does, based on our analysis and legitimate court orders.”
In response to the new tools, a member of the Monero community workgroup, Justin Ehrenhofer, said “We assume that CipherTrace has developed a novel method to trace Monero transactions, but I am not quite sure of what they can do, so it’s hard to interpret the legitimacy of their claims. Saying you have a method to look at Monero transactions doesn’t mean this is now as transparent as Bitcoin transactions.”
Another Monero proponent and information security engineer, Seth Simmons, disproves the latest claim from CipherTrace in a tweet, “There is no reason to think there is anything novel going on here until proven otherwise.”
Simmons further criticized the statements in CipherTrace’s press release for the alleged tracing tools by saying that there are “numerous errors in the understanding of Monero in the article.”
Although CipherTrace claimed on its website to have released the new tools to help crackdown on Monero-related crimes, there is little or no evidence yet that proves that the firm truly has such tools or that the product has accomplished any major success. However, if the claim indeed turns out valid, then the DHS can now track Monero transactions.
What’s your take on the alleged Monero tracing tools that CipherTrace claims to have delivered to the U.S. DHS to combat Monero-related crimes? Let us know in the comments section below.