As 'Apathy Towards Privacy' Prevails, This Firm Says It Can Track Monero 101
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While claims that US crypto intelligence firm CipherTrace can track transactions in monero (XMR), the most popular privacy coin, was met with skepticism, other analysts warned about “user apathy towards privacy.”

Yesterday, CipherTrace announced what it calls as the world’s first XMR tracing capabilities designed to allow law enforcement, government, and virtual asset service providers (VASPs) to track transactions with the use of the coin that was designed as privacy-oriented and dedicated to protecting its users’ anonymity.

The firm recognized that monero is “notoriously difficult-to-trace” which explains why an estimated 45% of darknet markets use monero, making it the second-favorite cryptocurrency of choice for criminals, preceded only by bitcoin (BTC).

CipherTrace was commissioned by the US Department of Homeland Security to develop the new tracing tools. The current value of the contract is USD 2.4 million, with a potential value of up to USD 3.6 million.

The contract has resulted in the development of forensic tools for law enforcement and government agencies to trace and visualize XMR transaction flows for criminal investigations.

“This provides ways to track stolen monero currencies or monero currencies used in illegal transactions. It also helps assure cryptocurrency exchanges, OTC trading desks, investment funds and custody providers that they do not accept monero from illicit sources and investigate monero received from potentially illicit sources and take appropriate actions to stay in compliance,” the statement said.

Despite these claims, the Cryptoverse remains skeptical over the efficacy of CipherTrace’s latest tools, reminiscent of Russia’s alleged success at developing a prototype of a partial de-anonymizing platform for cryptocurrencies.

According to crypto market data provider Coin Metrics, “it is impossible to determine the sender of a monero transaction.” Moreover, in 2017, Monero also adopted Bulletproofs, an even more recent cryptography advancement which hides (blinds) the amounts received, Coin Metrics said.

“They don’t even have addresses visible, so only deductions might come from addresses/sub-addresses shared [with] exchanges & obfuscate over time every [transaction] by them or others,” added one Twitter user.

On Reddit, another user was equally unconvinced, saying that while “research is always ongoing in this area, I would be very surprised if this company has discovered some novel method of analysis that isn’t already known from years of open research by the Monero communities and other academic and industry researchers. I would be even more surprised if they had a method that is broadly applicable to modern transactions, or that does not require significant and specific external data to draw definitive conclusions, like that from exchanges. They likely attempt to draw known statistical inferences from on-chain structures or external data, but again, it’s not possible to know since they aren’t saying.” has contacted CipherTrace for comment.

However, Coin Metrics claims that “user apathy towards privacy is probably the biggest shortcoming of the current anonymous transactions systems.”

“As crypto-currencies continue to be adopted by the wider public, its original privacy-oriented ethos must be transmitted in order for it to survive. Failing to do so could result in the original idea of anonymous transactions systems fading away and being superseded by other conceptions of what cryptocurrencies are useful for,” the firm said in their newsletter today.

Set up in 2015, CipherTrace says it provides blockchain analytics and crypto intelligence services to a portfolio of some 150 customers, including banks, regulators, VASPs, and others.

At pixel time (13:21 UTC), XMR, ranked 18th by market capitalization, trades at USD 96.5 and is up by 1.6% in a day and 7.6% in a week. The price is also up by 13% in a month and 34% in a year.


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