CipherTrace has a real beef with the anonymous cryptocurrency Monero. While the latter already has potential problems of its own in its code (currently being fixed), it now also has to deal with the tracing drive of this blockchain transaction analysis company, which is of course backed by US agencies.
An improved tracing tool to expose Monero?
Cryptocurrency regulatory compliance company CipherTrace promised as far back as November 2020: it has every intention of ending anonymity on Monero (XMR).
About 10 months later, it seems that CipherTrace has partially carried out its threat, with the help of Homeland Security – the US Department of Homeland Security. According to a company press release issued on August 4:
“CipherTrace takes Monero’s tracking capabilities to the next level, with the ability to track the flow of funds backwards from the targeted transaction to its source. (…) The new enhancements provide customers with the ability to run detailed visual reports to better track suspicious activity.”
This new Monero transaction tracing and visualization tool is designed to facilitate investigations by government agencies and financial institutions in the fight against money laundering and terrorist financing.
“For the sake” of (no longer very) anonymous cryptos, really?
According to CipherTrace CEO Dave Jevans, this tracing would be a good thing, as it should (very theoretically) decrease the aggressiveness of state agencies against Monero :
“The availability of this enhanced Monero tracing strengthens the long-term viability of privacy-focused cryptocurrencies by assuring regulators that crypto exchanges, over-the-counter (OTC) brokers, and other digital asset service providers will be able to comply with global regulatory requirements, while continuing to accept Monero transactions.”
It should be noted, however, that no additional details are given or concrete examples, which makes this enhanced tracing, which has been loudly announced by CipherTrace for nearly a year, seem a bit like mere “spin.”
However, it remains undeniable that government organizations are putting maximum pressure on tracing transactions on blockchains. The Internal Revenue Service (IRS) and the Office of Foreign Assets Control (OFAC) are particularly at the forefront of monitoring, with a magnifying glass, any crypto transaction.