In brief
- The IRS is taking applications from participants who believe they can break Monero's privacy.
- It's paying out $625,000 in two phases to those who manage to do so.
- The IRS cited rising cybercrime usage of privacy coins as a motivation behind the proposal.
The US Internal Revenue Services (IRS) will pay out up to $625,000 for anyone who cracks the untraceable cryptocurrency Monero, and other privacy coins, according to an official 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,” said the proposal.
Privacy coins like Monero allow users to transfer their funds with strong privacy. They use various methods to do this, such as obfuscating the transaction amounts and the wallet addresses of the sender and receiver. This is unlike Bitcoin or Ethereum, where addresses can be traced back to known wallets and to crypto exchanges, and subsequently, one’s identity.
Telecom Argentina hit by $7.5m Monero ransomware attack
Hackers have overtaken the internal network of Argentina's biggest telecommunications service, Telecom Argentina S.A., demanding a $7.5 million ransom to be paid in Monero (XMR). A screenshot circulating on social media appears to reveal the attackers' demands. "You have 2 days," reads the ransom note, which demands 109,345 XMR ($7.5 million). "If you do not pay in time the price will be doubled." Argentina's major telephone company, Telecom, just got hacked. Hackers requesting a ransom of $7....
“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,” the IRS added.
A bounty to crack Monero
Under the terms, private contractors and individuals are invited to submit a working prototype of how they intend to crack Monero.
These could range from a system that provides identifying information of a Monero wallet user, to the exact time, date, and amount for a specific transaction on the network, to even more sophisticated tools that can statistically predict when a certain address is likely to make a transaction.
Here’s why Coinbase still hasn’t listed Monero
Monero (XMR) is currently the 16th-largest cryptocurrency, according to CoinMarketCap, with a total market capitalization of nearly $1.27 billion, and exchanges such as Binance and Kraken list it. Why not Coinbase, then? According to CEO Brian Armstrong, it’s not simply a matter of preference. Appearing on the What Bitcoin Did podcast this week (via U.Today), Armstrong made that very clear to host Peter McCormack: “I would personally like to list it,” he affirmed. However, Armstrong suggested th...
The IRS is taking applications until September 16 for the proposal. Those who take the challenge will receive their bounty in two phases: First, an initial $500,000 payment for developing and proving a working concept of a privacy crack tool (due eight months after the proposal acceptance) and later, a $125,000 payment after a pilot test is completed and approved by the government.
Growing cybercrime is a factor
The agency noted rising criminal usage for privacy coins like Monero as one of its motivations behind the proposal, stating that privacy coins are becoming more popular and are being used more by illicit actors.
How Chainalysis Helps Catch Cryptocurrency Criminals
In 2014, the operators of the world’s largest cryptocurrency exchange, Mt. Gox, disclosed that hackers had drained 650,000 Bitcoin (worth about $500 million at the time). The ensuing chaos gave Michael Gronager, founder and CEO of Chainalysis, an idea: Since blockchain ledgers are public, what if someone created a tool that sifted through all of that data and traced the stolen money? So Gronager, then COO at Kraken, the crypto exchange that was supporting the Mt. Gox investigation, built one. Wi...
It explained, “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.”
So far, firms like on-chain tracking solution Chainalysis have worked with the US government for unearthing criminal activity on popular crypto networks like Bitcoin. Just last month, the firm was heralded by the IRS to help take down three notorious terrorist organizations.
But even Chainalysis has had a difficult time figuring out the privacy mechanisms that make coins like Monero what they are. Blockchain analytics firm CipherTrace claims it has a solution but this has been disputed by members of the Monero community.
Can you do any better?
