U.S. Department of Homeland Security’s Contractor Claims Monero Tracing Tools

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Ciphertrace, a blockchain surveillance company claims to have developed the “world’s first” monero tracing tools for the US Department of Homeland Security (DHS) and other law enforcement. According to the firm’s press statement, Ciphertrace made forensic tools for the DHS in order to track illegitimate monero transactions. Despite the company’s claims, there is absolutely no proof offered that shows the firm actually has made such tools.

Since the open-source cryptocurrency was first started in 2014, the Monero (XMR) project has been heralded for privacy-centric strategies. The digital currency network utilizes enforced privacy for all transactions by leveraging principles like bulletproofs, ring signatures, and stealth (one-time) addresses.

Due to the privacy-centric improvements, the digital currency XMR has acquired prestige on darknet markets, as monero represents a great share of darknet transactions (according to reports, its the second most used cryptocurrency, after bitcoin, on darknet)

However, Ciphertrace, a blockchain intel firm that deals with international regulators and law enforcement and claims it has a tool that can “visualize and trace Monero transactions.”

“Ciphertrace developed tools to explore Monero transactions to help in investigations,” the company detailed in a news release on August 31. “These tools consist of transaction search, visualization, and exploration tools for Monero transaction flows that have been integrated with our Inspector financial investigations product. This offers methods to track stolen Monero currencies or Monero currencies utilized in unlawful transactions.”

Ciphertrace notes that monero is represented on 45% of all darknet transactions and calls it the “second-favorite cryptocurrency of choice” amongst lawbreakers. The CEO of Ciphertrace, Dave Jevans, states that while many individuals believe it is almost impossible to determine real sources, the firm has been working for over a year, studying the Monero network in detail.

Jevans says the firm has developed tools for law enforcement to assist in uncovering unlawful monero transactions, however, there’s still a lot of work that still needs to be done.

Jevans stresses that “Monero is one of the most privacy-oriented cryptocurrencies. Our development and research team worked for over a year on establishing strategies for offering monetary investigators with surveillance and analysis tools. There is much work still to be done, however, Ciphertrace is happy to reveal the world’s ‘very first Monero tracing ability.’ We are grateful for the assistance of the Department of Homeland Security’s Science & Technology Directorate on this task.”

The news release by Ciphertace published on August 31, 2020, however, offers zero proof of any monero-tracing tools. The statement is simply a claim that the business has such tools, but there are extremely few reasons provided in the statement to actually believe it.

Ciphertrace, a U.S. Department of Homeland Security's Contractor Claims Monero Tracing Is Now Possible. Experts are skeptical.
Information security engineer and Monero proponent, Seth Simmons, does not believe Ciphertrace’s claims without actual proof.

Despite the press release, crypto-community members have a tough time believing that Ciphertrace really has a grasp at tracking XMR transactions. Justin Ehrenhofer says on Twitter that “It is incredibly unlikely that Ciphertrace can trace Monero to the extent that they can trace any other cryptocoin,”

Monero advocate and information security engineer, Seth Simmons, likewise did not believe Ciphertrace’s newest claims.

“There is no reason to believe there is anything novel going on here till proven otherwise,” Simmons tweeted. “The more than likely response is they’re utilizing techniques established by the Monero community to enhance Monero to de-anonymize some particular transactions with external information. The Monero community has long been at the leading edge of privacy research in an effort to construct more powerful tools, as evidenced by the ‘Breaking Monero’ series.”

Seth Simmons continued with a scathing critique of Ciphertrace’s alleged tracing tool press release and highlights there are various mistakes in the “understanding of Monero in the article.”

“Without more information, there isn’t actually anything to talk about. Some unclear and vague info offered by Ciphertrace in this post is not possible without external information (like KYC info from exchanges),” the monero advocate stated.

What do you think of the supposed tools Ciphertrace claims to have against monero’s transaction privacy? Let us know in the comments below.

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