CipherTrace unveils Monero transaction-tracing tool

CipherTrace, the analytics firm, has unveiled the first-of-its-kind tool for tracing Monero (XMR) transaction flows, according to Cointelegraph

The development took place over a year, with the U.S. Department of Homeland Security as the client.

Authorities have shown heightened interest in this development given the growing popularity of XMR among criminals. According to The Block analysts, Monero became the second most in-demand asset on darknet markets after Bitcoin.

“The tool includes facilities for searching transactions, investigating and visualising XMR flows. It has been incorporated into CipherTrace’s financial investigations product,” said the head of the company, Dave Jevans.

The new tool will enable tracking stolen coins and those used for illicit transactions.

According to CipherTrace’s Chief Financial Analyst John Jeffris, in its current version the tool cannot yet be used for AML practices, but is suitable for identifying sources in cases of extortion. In the latter case, law enforcement agencies can narrow the number of suspects to a few addresses.

Jeffris noted that, like CipherTrace’s other products, the new tool protects user privacy, since it does not identify individuals. This option can reassure crypto exchanges, OTC desks and investment funds that they are not receiving XMR from illicit sources.

In 2018, Monero was delisted by Korbit and Coincheck. Later, platforms BitBay, Bithumb and Huobi Korea dropped support for the coin. In August this year, the delisting of XMR was carried out by several Australian cryptocurrency exchanges.

The organizer of the Monero working group Justin Ehrenhofer questioned whether CipherTrace is able to track XMR to the same extent as other cryptocurrencies. In the absence of details, his statements were deemed speculative, and he added that developers will continue to work on improving the coin’s privacy properties.

What is Monero (XMR)?

“We have no basis to believe there are new ways to track Monero transactions, nor any signs of their effectiveness. Users can continue to transact with the same confidence,” Ehrenhofer noted.

Jeffris disagreed with his counterpart. He said the new tool laid the groundwork for future, more advanced means to track XMR transactions.

In April, Monero developers added the Dandelion++ transaction-privacy technology, which makes it harder to link a transaction to a specific IP address.

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