A big resonance happened in the crypto community after the latest news about Monero tracking. Cryptocurrency intelligence company CipherTrace claims that had developed an innovative crypto-forensic tool to trace Monero transactions and make criminal investigations.
Privacy and anonymity are the main features of cryptocurrencies, but due to the nature of blockchain technology, crypto transactions are not as anonymous as many people may think. Most of the cryptocurrencies are pseudonymous, as each transaction on a blockchain network is transparent, making it possible to trace wallet addresses back to their source and even IP addresses of the users, Monero (XMR) is the only fully anonymous cryptocurrency.
Can Monero (XMR) be traced in 2020?
While Bitcoin has been the most popular cryptocurrency among cyber-criminals, a lot of darknet market transactions are conducted using the most anonymous coin Monero (XMR). Due to this, the US government has been extremely interested in finding a way to trace Monero. While there hasn’t previously been a tool capable of tracing Monero transactions, Dave Jevans, the CEO of CipherTrace, mentioned that the company has developed the first tool for tracking Monero transactions. Dave also said that the tool will help to assure cryptocurrency exchanges that they are not accepting Monero from illicit sources. This could be a game-changer for Monero, which has recently been delisted from a number of exchanges due to the strong anonymity features and the lack of transparency compared with other cryptocurrencies.
What is the reaction in Crypto community on this?
Such a development would render Monero’s primary use case void. But, given the broadness of the claims, some in the community remain cynical of the tool’s capabilities. In an interview with Jevans, Compliance Analyst at DV Trading, Justin Ehrenhofer, and Researcher at Monero Research Labs, Dr. Sarang Noether, dived deeper to find out more.
While there are a number of privacy coins out there, Monero remains the best and the most unique due to advanced security features. Justin Ehrenhofer explained that the main technology behind Monero is RingCT, which is a system combining ring signatures and Confidential Transactions cryptography. Ultimately, Monero makes it possible to hide all parts of a transaction, including the sender, receiver, and balance details.
With this in mind, Justin Ehrenhofer mentioned that Monero has been specifically designed to withstand analysis from governments and others who attempt to trace it. Therefore, he remains confident in Monero’s use: “Since we have no reason to believe that there are new ways of trying to trace Monero transactions, nor any indication of their effectiveness, Monero users can continue to transact in confidence.” Jefferies, however, begs to differ, noting that the tools CipherTrace has developed for the DHS have laid the groundwork for future, more advanced investigative tools, which law enforcement officials will leverage for Monero transactions.
Skepticism aside, some crypto enthusiasts believe that financial surveillance tools, such as the ones being developed by CipherTrace, violate human privacy rights. Alex Gladstein, the chief strategy officer at the Human Rights Foundation — a nonprofit organization — recently argued on The Blockchain Debate podcast that blockchain analysis companies are downright bad for Bitcoin and other cryptocurrencies.
Gladstein, who was joined on the show by Jevans, explained that providing government officials with cryptocurrency transaction information further allows governments to spy on individuals’ financial transaction data. He stated that “financial surveillance” companies, like CipherTrace, may even decide to work with dictatorships, allowing these governments to have more control over citizens.