Privacy coins no more? CipherTrace files patents for tracing Monero transactions

The firm claims it will be able to identify XMR used for illicit purposes to support criminal investigations.

Crypto analytics firm CipherTrace announced on Friday that it had filed two patents for technology capable of tracing transactions for privacy coin Monero.

In a Nov. 20 blog from CipherTrace, the firm stated that the patents would include forensic tools to explore Monero (XMR) transaction flows to assist in financial investigations, statistical and probabilistic methods for scoring transactions and clustering likely wallet owners, as well as visualization tools and ways to track stolen or illegally used XMR.

“CipherTrace’s Monero tracing capabilities will allow [Virtual Asset Service Providers] to identify when inbound XMR may have criminal origins, allowing them to adequately risk rate customer transactions per any required regulations,” the blog stated. “[Our] goal is to enable the detection of criminal users, therefore increasing the safety and sustainability of privacy coins like Monero in the future.”

While Bitcoin (BTC) is still the preferred medium of exchange for many darknet market users, there has been increasing acceptance for privacy coins like XMR. Law enforcement agencies have not yet determined a reliable way to trace Monero, and firms like CipherTrace have an opportunity — the company has reportedly been working on a means to trace XMR transactions since early 2019.

CipherTrace CEO Dave Jevans told Cointelegraph in August that the firm developed the first tool for tracking Monero transactions. Such a tool could potentially support investigations of crimes and reduce incidents of money laundering.

The company has stated it developed these Monero-tracing tools as part of a project with the U.S. Department of Homeland Security, but the latter isn’t the only government agency looking for a way to identify XMR wallets, transaction dates and times. In September, the Internal Revenue Service announced it would give a bounty of up to $625,000 to anyone who can break Monero.

Capabilities for CipherTrace’s tracing tools have not yet been confirmed. One Monero Outreach representative told Cointelegraph in October that they would be “highly suspicious of any claims that corporations can trace Monero transactions” and any firm that did so would be unlikely to “trace the wallets or amounts for any transaction.”

The price of Monero is $123.37 at the time of publication, having fallen 3.6% in the last 24 hours.

Continue reading

Privacy should be at the core of CBDCs, says Boston Fed research director

Privacy should be a key talking point from the beginning of CBDC development.

Robert Bench, the Federal Reserve Bank of Boston’s director of applied research, thinks privacy should be a focus during the creation of digital money, not an afterthought. 

“Privacy is a question that we have learned is critical from a technical perspective,” Bench said during a Chamber of Digital Commerce panel on Friday:

“One of our learnings is that the questions of privacy and identity must be considered at the earliest stage of the architecture. Making privacy or identity an ad hoc process is suboptimal from both a privacy or identity perspective, and most importantly from a security perspective.”

A largely digital world often means less privacy. Money is no exception. While countries look toward central bank digital currencies, or CBDCs, payments are less private than the cash transactions of yesterday. CBDCs may or may not give users privacy, however.

“It’s something that policy makers are going to need to think about early,” Bench said of privacy. “When you add it on later, it doesn’t work as well.”

Bench’s comments answered a question from panel moderator and former U.S. Commodity Futures Trading Commission chairman Chris Giancarlo, who asked about privacy considerations when it comes to a U.S.CBDC, as well as other digital money.

In the discussion, Tether (USDT) co-founder Craig Sellars looked to physical cash as the benchmark for necessary privacy in the digital world. “They have certain unremovable features: Fungibility, privacy and anonymity at the peer-to-peer level,” he said:

“We should shift our questioning to this: If we have the technology to preserve those exact features of paper dollars, why should we accept digital dollars with any fewer freedoms? I argue that we shouldn’t and we mustn’t.”

Sellars said the U.S. has “an open field” ahead in terms of building a private and cash-like CBDC, as opposed to the “walled garden” structure used in competing countries’ CBDC endeavors.

In contrast with this pro-privacy sentiment, however, the U.S. Internal Revenue Service recently hired two crypto analytics firms to break the privacy technology behind the anonymity-focused Monero (XMR) asset.

Continue reading

Cashfusion Use Increased by 328%, $200M in BCH Fused and Close to 20,000 Fusions

Cashfusion Use Increased by 328%, $200M in BCH Fused and Close to 20,000 FusionsCashfusion, the privacy-enhancing solution for the Bitcoin Cash network is nearing its one-year anniversary and during the last four months, fusions have increased by 328.93%. The protocol recently completed a security audit and fusions are nearing 20k with close to $200 million worth of bitcoin cash fused to-date. On November 28, 2020, the Cashfusion protocol […]

The post Cashfusion Use Increased by 328%, $200M in BCH Fused and Close to 20,000 Fusions appeared first on Bitcoin News.

Continue reading

Mandatory KYC verification may contradict privacy laws in South Korea

Will this legal contradiction be resolved before the deadline?

With the South Korean government preparing to implement know-your-customer (KYC) and anti-money laundering (AML) compliance processes, there is confusion among legal experts as to whether the requirements contradict other laws.

According to Digital Today, the new requirements would contravene the existing Personal Information Protection Act, which stipulates that local companies cannot legally request social security numbers.

The measure also cover financial institutions, however they can request it under exceptional circumstances, such as for major banking transactions.

The Enforcement Decree of the Special Payment Act is expected to come into force in March 2021 and will require “virtual asset services providers” to confirm the real names of customers by verifying them against personal data such as social security numbers.

One special note made by the Financial Information Analysis Institute addressed the current situation of the ambiguity in the upcoming AML-KYC bill on crypto exchanges. It argued that because an exchange is hosted purely on the internet it is not just a financial institution but is more like a “mail-order seller like an internet shopping mall.”

“It does not mean that virtual asset operators are given the status of financial business operators or incorporated into institutional financial companies through the enforcement of the revised special money law.”

Local legal experts specializing in the crypto industry stated that due to the ambiguity of the upcoming new AML-KYC compliance measures, “there is still a long way to go, even if such content is included in the Virtual Asset Business Rights Act.”

The crypto bill, to be implemented in March next year as well, calls for existing crypto exchanges to meet requirements for a real-name account and ISMS authentication and report their operations within six months after the law’s implementation.

However, legal experts believe that the issue should be discussed as soon as possible by clarifying the status of the crypto exchanges within the upcoming AML-KYC new measures and if legal exemptions could be applied to the crypto exchanges in terms of asking for social security numbers.

Continue reading