IRS Offers $625,000 For Participants To Break Monero’s Privacy

The IRS offers $625,000 for participants to try and break the Monero’s privacy network which will be paid out in two phases for those who manage to do so. Following the latest Monero news, we can see that the federal agency cited rising cybercrime usage of privacy coins as the motivation behind the idea.

The IRS offers $625,000 for anyone that will crack the privacy coin Monero as well as other privacy coins according to the proposal published last week:

 “IRS-CI is seeking a solution with one or more contractors to provide innovative solutions for tracing and attribution of privacy coins, such as expert tools, data, source code, algorithms, and software development services.”

The privacy coins such as Monero, allow users to transfer their funds with a strong level of privacy. They use various methods to do so such as obfuscating the transaction amounts and the wallet addresses of the receiver and sender. This is not something like Bitcoin and Ethereum do where addresses can be traced back to their known wallets and exchanges or eventually to someone’s identity. The IRS added:

 “Currently, there are limited investigative resources for tracing transactions involving privacy cryptocurrency coins such as Monero or other off-chain transactions that provide privacy to illicit actors.”

Private individuals and contractors are also invited to submit the working prototype of how they aim to crack Monero. These could range from a system that provides identifying information of a Monero wallet user to the date, time, and amount of the transaction on the network, as well as more sophisticated tools that can predict when a certain address will make another transaction. The IRS is taking applications until September 16^th and those that will take part will receive their bounty in two phases: $500,000 payment for developing a working concept of a privacy crack tool and an additional $125,000 payment after the pilot test is completed and approved by the government.

The agency noted that the rising criminal usage for privacy coins such as Monero is one of the motivations behind the proposal and privacy coins are becoming more popular and more used by the criminals:

 “In April 2020 a ransomware group called Sodinokibi that future ransoms payments will be in Monero (XMR) rather than Bitcoin (BTC) due to transaction privacy concerns.”

There have been companies like Chainalysis that worked with the US government for fighting criminal activity on popular crypto networks such as Bitcoin. The company even worked with the IRS to help take down three terrorist organizations. Chainalysis had a hard time figuring out the privacy mechanisms but CipherTrace on the other hand, claims it has a solution for this but it was disputed by the members of the community.