As per the statement, the tracking tools for Monero have been developed with the main intention of rendering them function as a forensic tool that will aid in criminal scrutiny.
CipherTrace asserts that it can have an in-depth look at Monero transactions through transaction search and scan, and also visualization of Monero transaction flow.
The tools, CipherTrace has revealed, will be offered as portion of the financial transaction scrutiny tool named CipherTrace’s Insperctor:
“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.”
International agencies such as Europol have affirmed that Monero is one among a handful of cryptos which can offer total anonymity. Due to this it continues to receive negative contemplation from governments leading to removal of listing from cryptocurrency exchanges. Zcash and Komodo are other privacy focused cryptos offering total anonymity of transactions.
The tool for tracking Monero was an outcome of investment made by the US government to put efforts to “de-anonymize” coins such as Monero. Data shard by CipherTrace indicates that 45% of all dealings on the dark net are paid through transactions in Monero.
The privacy coin utilizes ring signatures that permit the source of a transaction to stay concealed by mixing it with other transactions. CipherTrace CEO Dave Jevans provided details of the tracking tool:
“Monero (XMR) is one of the most privacy-oriented cryptocurrencies. Our research and development team worked for a year on developing techniques for providing financial investigators with analysis tools. There is much work still to be done, but CipherTrace is proud to announce the world’s first Monero tracing capability. We are grateful for the support of the Department of Homeland Security’s Science & Technology Directorate on this project.”
Nevertheless, the crypto community is not totally convinced. Several users have doubts about the reliability of the traceability tool and its ability. A section of crypto investors are concerned about the launch of tools that can undermine privacy of crypto investors. A Reddit user, u/bawdyanarchist, wrote as follows:
“Yes they probably have some limited capabilities in certain circumstances to correlate sets of outputs together. Namely by combining low probability transaction graphs, with off chain heuristics, and in some cases poisoned outputs.”
“But no, they can’t “track” it in any sense qualitatively like Bitcoin (or the fake privacy coins), which are 99% open book. At best they have a very small subset of outputs that have some statistical probability of correlation. Most of it can be easily mitigated with basic opsec.”