Privacy and anonymity are the main benefits of crypto currencies, but due to the transparent nature of Blockchain technology, transactions in crypto currencies are not as anonymous as some people think. Rather, Bitcoin (BTC) and other crypto-currencies are pseudo-anonymous, as each transaction in a Blockchain network is transparent, allowing the addresses of the portfolios to be traced back to their origin.
For example, the crypto currency intelligence company CipherTrace is able to track several hundred transactions in crypto currencies by analyzing portfolio addresses, exchange information and intelligent contracts. John Jefferies, CipherTrace’s chief financial analyst, told Cointelegraph that the company is currently capable of tracking more than 800 crypto currencies to support crime investigations. This is extremely relevant, as recent findings show that cryptomone-related crimes during the first half of this year have already accounted for $1.4 billion in theft, hacking and fraud.
Can Monero now be traced?
While Bitcoin has been ranked as the number one crypto option among criminals, a large number of transactions in dark markets are conducted using the privacy currency Monero (XMR). Because of this, law enforcement has been very interested in finding a way to track Monero. While there has been no tool to track Monero transactions until now, Dave Jevans, the CEO of CipherTrace, said that the company has developed the first tool to track Monero transactions.
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According to Jevans, the tool, which has been in development for more than a year, will be used by the U.S. Department of Homeland Security to track Monero transactions. He noted that the recent CipherTrace 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 criminal investigations:
„The tools include transaction search, scan and visualization tools for Monero transaction flows that have been integrated into the CipherTrace inspectors‘ financial investigation product.
A game changer to combat those who use Monero for crime
Specifically, Jefferies from CipherTrace explained that the tools allow for the tracking of stolen Monero or those used for illegal transactions. While the product is not yet suitable for anti-money laundering purposes, Jefferies mentioned that ransomware cases with Monero can be traced back to their source. This is remarkable, as it has been mentioned that the criminals behind ransomware are switching from Bitcoin to Monero to better protect their identities.
According to Jefferies, the tool will allow law enforcement officers to reduce ransomware cases to a couple of different crypto-currency addresses. Although Jefferies was unable to reveal the exact number of transactions tracked, he shared that the tool has been validated on a large number of Monero transactions:
„The tool shows the transaction flows. Like all CipherTrace products, it protects user privacy by not tracking individual user identities. That’s what law enforcement does, based on our analysis and legitimate court orders.
Jefferies further noted that the instruments help reassure crypto exchanges, OTC trading desks and investment funds that they are not accepting Monero from illicit sources. This could very well be a game changer for Monero, which has recently been removed from the list of several exchanges due to poor compliance standards and a general lack of transparency compared to other cryptosystems.
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