The XMR tracking tool by CipherTrace is not effective and it will not impact the privacy of Monero users. Following the latest reports on the tracing tool, we are learning more about it in our Monero latest news.
The blockchain analysis CipherTrace released an XMR tracking tool that is able to trace monero transactions and it was developed for the use of the Department of Homeland Security that wants to investigate crypto-related thefts and crime. The community doubts that the tool is effective and so to the researchers.
CipherTrace announced the Monero tracing tool that is able to identify users behind private transactions by visualizing the transaction flow. Based on the comments from Dave Jensen, the CipherTrace CEO, the tool can narrow down the identities of Monero users based on the decoy elimination as it also scores the transaction inputs and outputs by assigning risk levels to different addresses, allowing investigators to reach a conclusion about the users’ identities.
The tracking tool was developed for the use of the United States Department of Homeland Security which is meant to be used in criminal investigations regarding thefts of XMR funds or other illegal activities that involve privacy-centric transactions. CipherTrace noted that Monero’s privacy features make the coin appealing to criminals since 45% of the darknet markets, make Monero the second most widely used coin after bitcoin.
A huge part of the Monero community doubts that the tool is effective. Researcher Sarang Noether said that CipherTrace hasn’t provided “substantial details” that prove the effectiveness of the tool’s scope:
“Without such details or evidence, it is not possible to assess what the tool does, or how well it does it. As a mathematician and cryptographer, I prefer to base my technical conclusions on data, not on press releases or unsubstantiated claims.”
It doesn’t seem that CipherTrace is capable of deriving the users’ identities from basic wallet addresses and transaction data especially not to the same extent that it can identify the BTC users. It seems that CipherTrace’s tools depend on the off-chain data from crypto exchanges and other sources. The users that keep their personal data separate from their Monero address can also expect more privacy. That said, governments and regulators can use the tool and make their own conclusions. CipherTrace on the other hand, says that the tool has already been used in multiple investigations.
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