Blockchain analytics and forensics firm CipherTrace revealed in a recent blog that it had filed two different patents for technology capable of tracing transactions for privacy coin Monero (XRM).
According to the post, the Monero tracker would have the capacity to trace illicit transactions involving privacy coins. The forensic tools will feature statistical and probabilistic methods for exploring transactions and clustering likely XRM holders.
The patented tech will also include methodologies for gathering intelligence on transactions that rely on third party nodes and tracking stolen or illegally used XMR. CipherTrace has reportedly been developing this technology since early 2019.
A Monero tracking tool could potentially support financial investigations of crimes related to stablecoin use and deter criminals from using XMR to facilitate their operations.
“CipherTrace’s Monero tracing capabilities will allow (Virtual Asset Service Providers) to identify when inbound XMR may have criminal origins, allowing them to adequately risk rate customer transactions per any required regulations,” an excerpt from the blog read.
This development comes just two months after CipherTrace CEO Dave Jevans revealed that his firm was working to develop the first forensic tool capable of tracking Monero transactions.
Monero’s Status as a True ‘Privacy Coin’ In Jeopardy
The CipherTrace visual tools and ways to trace stolen XMR are reportedly part of a project by the US Homeland Security. Other U.S government agencies, such as the Internal Revenue Service (IRS), have also expressed intentions to develop a reliable way to track and identify XMR wallets and transactions.
In September, the IRS offered a $625,000 bounty to contractors who would work out the means to infiltrate Monero’s layers of privacy. This growing interest in Monero tracing threatens XRM’s standing as a true privacy coin.
Ciphertrace claims that technology for peering into XMR’s transactions is vital, as 45% of darknet markets now support XRM, which reportedly is the second-favorite crypto of choice among criminals.
The blockchain analytics firm pointed out that with or without the transaction-tracing tools, privacy coins like XRM face increased scrutiny from exchanges.
This month, ShapeShift succumbed to pressure from law enforcement and delisted privacy coins Zcash, XRM, and Dash. Other top exchanges such as OKEx and Upbit have also delisted privacy coins from their trading platforms.
As per the CipherTrace blog post, XRM tracing capabilities will enable the detection of criminal XRM users, thus fostering privacy coins’ safety and sustainability in the future.
Will CipherTrace Crack Monero?
Law enforcement agencies are yet to find a foolproof way of tracing privacy-centric coin transactions and wallets despite their best attempts.
Investigative bodies such as the FBI have even sought out investigative blockchain tech from public sector startups such as Chainalysis in an attempt to trace crypto.
According to one Monero representative, claims that any corporations that already have the capability to crack the privacy-centric cryptocurrency are “highly suspicious.”