KEY POINTS

  • CipherTrace develops a tool for tracking Monero based on its contract with the U.S. Department of Homeland Security
  • CipherTrace CEO said the tracking tool is more about probability than guarantee
  • The CEO also said the tool could help Monero get listed again in exchanges that delisted it

Intelligence firm CipherTrace announced it has completed building a tool for tracing the privacy-centric cryptocurrency Monero (XMR). Created at the request of the U.S. Department of Homeland Security (DHS), CipherTrace said the tool would be beneficial for the privacy coin for, among other things, getting listed again in exchanges that delisted XMR.

At the very core of Monero’s design is privacy. Its ring signature mechanism allows signers to create a distinct signature for a transaction. Also, stealth addresses allow senders to create one-time addresses to be used when sending tokens to a recipient. These features made Monero a popular coin to be used for transactions on the dark web. 

Those very features are also the reasons why Monero is dropped by many exchanges, including Europe’s BitBay and all regulated exchanges in Japan like Coincheck, where the country’s Financial Services Agency (FSA) has imposed a ban on all private cryptocurrencies.

CipherTrace’s tool, the company said, could allow investigators to explore Monero transactions, news outlet Decrypt  reported. The firm spent one year developing the tool as per its contract with the DHS Science & Technology. It was also paid $2.4 million out of a maximum of $3.6 million potential value in the contract signed in 2018.

While the tool can track stolen or illegal funds, CipherTrace plans to add more features, such as wallet identification and exchange attribution. But the private nature of Monero makes the tool unable to give a 100% guarantee on the data.

Speaking with Decrypt, CipherTrace CEO Dave Jevans said tracing Monero is more about probability than guarantee. "You can say: Well, I have 98% probability that this went from this address to this address, or 78%, or that type of thing," he added.

When asked about whether the tool can trace the identity of the individuals, Jevans said they have not done that at CipherTrace. "We don’t identify individuals, he said. That task belonged to the law enforcement, Jevans added.

The CEO thinks the tool could help bring Monero back to exchanges that delisted it. Analytics, he said, is crucial for privacy coins and he hoped the tool could help ensure Monero’s viability.