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The Privacy Coin Monero (XMR) is very popular with criminals because of the anonymous transactions. CipherTrace wants to counter this with newly patented software. The US Department of the Interior supports the project.
Privacy Coins have always been very popular with those who want to make their crypto-currency transactions anonymous. The most popular Privacy Coins are Monero (XMR) and ZCash (ZEC). However, anonymity could soon be a thing of the past. The crypto-analysis company CipherTrace has applied for a patent for a software that also allows transactions to be tracked with Monero. BTC-ECHO reported about a fortnight by The News Spy ago about an attack of a hacker on the Monero network. In order to expose the supposed anonymity of Monero as a myth, the hacker has since been publishing sensitive data of alleged XMR users. This includes not only their transactions, but also their IP addresses and pornographic material. But CipherTrace is certainly pursuing completely different goals with its new software.
Since the middle of last year, CipherTrace has been working together with the certification platform Shyft to offer a solution that simultaneously puts a stop to criminal activities and respects the privacy of the users. CipherTrace informs about its new project via a message on its homepage. Since the beginning of 2019, CipherTrace has been developing tools to make transactions with Monero traceable. This is an initiative of the US Department of Homeland Security. The aim is to provide law enforcement agencies with even more resources for the investigation of Monero transactions and addresses in connection with criminal activities.
Monero meets with high acceptance in DarkNet
According to CipherTrace, 45 percent of Darknet trading sites now support payments with Monero. Only Bitcoin enjoys even greater acceptance. How can this popularity be explained? Well, Monero uses a particularly unique design to ensure user anonymity. Privacy is enforced to a certain extent. Unlike other crypto-currencies with enhanced anonymity, Monero uses a strong privacy algorithm by default for all transactions. As a result, users cannot be checked or penalised by external parties for using private transactions. This is of course a thorn in the side of the law enforcement agencies for which CipherTrace works. For this reason, some major crypto exchanges now do not offer XMR trading.
How exactly does CipherTrace’s software try to circumvent these mechanisms? The exact procedure is of course not explained. The announcement talks about a „probabilistic approach“. A number of mathematical tools and concepts are used. By means of probability calculation, Virtual Asset Service Providers (VASPs) are supposed to recognise when incoming XMR data may be of criminal origin.