- Chainalysis has won one of two contracts from the IRS to create tracing tools for Monero
- The IRS advertised for candidates last month and has selected Chainalsysis and Integra, a Texas-based company
- Monero transactions have been almost impossible to trace since the coin’s inception in 2014
Chainalysis has won one of two contracts from the Inland Revenue Service (IRS) to create tracing tools for the Monero cryptocurrency and Layer 2 protocols. The two contracts, worth $625,000 each, were awarded to Chainalysis, one of the pioneers of the blockchain analytics space, and Texas-based Integra FEC. The deal means that Chainalysis and Integra will now work hand in hand with the IRS in tracing Monero transactions they believe are linked to tax avoidance and other similar crimes.
Chainalysis Brings Monero to Heel
Monero has long been a nut that the IRS has wished to crack, known as it is for being the more private brother of Bitcoin, allowing users to conduct transactions in almost complete secrecy. The coin was launched in 2014 but lay in relative obscurity until the biggest dark web marketplace at the time, AlphaBay, announced that it was accepting it in 2016, quickly making it a favorite among dark web merchants and buyers who wanted more privacy that Bitcoin offered.
The IRS announced less than three weeks ago that it was on the hunt for a company to crack the code and trace Monero transactions, and has moved quickly in procuring Chainalysis and Integra. Another potential candidate, CipherTrace, announced that it had developed software to track Monero transactions days before the IRS’s request was published , but it is not known if they applied for the contract.
Privacy Coins Finally in the Government’s Sights
For such an old cryptocurrency, Monero has avoided the eagle eyes of blockchain analytics firms for an impressively long time. In January this year Europol admitted that they couldn’t track Monero transactions, but some considered this a potential ruse to push illegal cryptocurrency users onto the coin and trap them.
While this may be a little far-fetched, it seems that finally, after seven years riding wild, the Integra/Chainalysis IRS deal means that the government finally has privacy coins in its sights.