- A cybersecurity firm, CipherTrace announced on Monday their second patent on tracing and tracking privacy-enabled cryptocurrency, Monero (XMR)
A press release shared to the BEG news desk confirms CipherTrace, a blockchain analysis, and cybersecurity firm, has filed its second “Monero tracing” patent – “Techniques and Probabilistic Methods for Tracing Monero.” The patent follows the firm’s registration of the “Systems and Methods for Investigating Monero” patent earlier in the month in a bid to trace and track the privacy-enabled cryptocurrency.
Over the past few years, regulators and governments worldwide, including the United States and Russia, have been working on solutions to tracking XMR. According to the statement, over 45% of the darknet transactions are completed using privacy coins – with Monero leading the line, only second to Bitcoin (BTC).
Monero gives the user total anonymity through a privacy-by-default blockchain, unlike other privacy-based blockchains, ensuring no user can be deliberately or accidentally be traceable.
In September, the crypto intelligence firm announced a partnership with the U.S. Department of Homeland Security to develop a forensic tool to track and trace Monero. At the time, CipherTrace CEO Dave Jevans confirmed the product has been in the works for a year stating,
“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.”
The latest patent will allow CipherTrace to build unique solutions and a toolkit to help regulators and law enforcement officials easily trace private cryptocurrency. The patent covers many features, including forensic tools to explore the XMR transactions, statistical and probabilistic methods to clustering likely owners, transaction visualization tools and methodologies for gaining intelligence about XMR transactions and node operators, etc.
This will exacerbate money laundering across the virtual asset service providers (VASPs) such as crypto exchanges and custodial services. Monero’s privacy makes it difficult for these VASPs to take on the compliance risk due to the high possibility and risk of money laundering. Over the past year, several exchanges have delisted XMR due to these challenges, including OKEx, Upbit, and recently Switzerland-based ShapeShift.
While CipherTrace works to remove the anonymity that cryptocurrency assets offer, the privacy of the crypto users’ identities will not be disclosed, the statement reads.
“We do, however, identify the Virtual Asset Service Providers (VASPs) that are commercial companies operating cryptocurrency businesses.”