Monero (XMR) has long been recognized as one of the most powerful 'privacy coins' in the industry; the coin is a favorite of users who want to be as anonymous as possible in their transactions. However, Monero’s days as a true 'privacy coin' may be numbered.
Indeed, Cybersecurity firm Ciphertrace filed not one, but two patents for technology that it claims is capable of tracking transactions on the Monero network.
”Law Enforcement Interest in Monero Tracing Has Soared.”
“With 45% of darknet markets now supporting Monero — the second-favorite cryptocurrency of choice among criminals, just behind Bitcoin — law enforcement interest in Monero tracing has soared,” a blog post by the company said. Ciphertrace also said that the development of the technology is part of the scope of a United States Homeland Security project.
According to the same blog post, the patented technology includes “statistical and probabilistic methods for scoring transaction and clustering likely owners,” as well as “methodologies for gaining intelligence about transactions that rely on third party nodes,” and “development of original tracing methodologies based on simulation techniques and Bayesian approaches,” among other things.
Additionally, CipherTrace pointed out that with or without the transaction-tracing tools, privacy coins like Monero are facing more and more scrutiny from cryptocurrency exchanges.
Indeed, as law enforcement agencies continue to put pressure on these exchanges, the exchanges wish to distance themselves from criminal activity as much as possible: “some exchanges, such as OKEx and Upbit, have already delisted privacy coins based on their interpretation of FATF guidelines,” the blog post said. “This month, Colorado & Switzerland based ShapeShift delisted privacy coins Zcash , Dash, and Monero.”
The nation of South Korea also announced that it would be officially banning the use of privacy coins, which has forced exchanges operating in the country to discontinue their support for privacy coins.
This “Doesn’t Mean This Is Now as Transparent as Bitcoin Transactions.”
CipherTrace’s first Monero-tracing tech patent was filed in August of this year. At the time, Justin Ehrenhofer, organizer of the Monero community workgroup and a regulatory compliance analyst at DV Chain, told CoinTelegraph that while CipherTrace may have developed a “novel method” of tracing Monero transactions, it “doesn’t mean [Monero] is now as transparent as Bitcoin transactions.”
Justin Ehrenhofer, organizer of the Monero community workgroup and a regulatory compliance analyst at DV Chain.
“Without specific information, any speculation is just that — speculation,” Ehrendorfer said.
