Uncle Sam Wants to Snoop on Your Monero Transactions

Posted in: Archive
December 5, 2018 6:02 AM UTC

The United States Department of Homeland Security has announced its intention to develop a monitoring framework to effectively track Zcash and Monero transactions through enhanced forensic analytics capabilities. In a newly released document, the DHS reveals that it aims to achieve this by designing “a product to support the implementation of block chain based forensics, data analysis, and information sharing.”

Released on November 30, the agency’s Small Business Innovation Research (SBIR) FY19 Pre-Solicitation document has been made available to interested parties, giving them an opportunity to comment or request information about selected topic areas, one of which is ‘Blockchain Applications for Homeland Security Forensic Analytics’.

Uncle Sam Goes After Private Transactions

According to the document, blockchain monitoring frameworks geared toward Zcash and Monero are of special interest to the DHS because its existing Bitcoin-focused analytics capabilities “cover only a limited scope within the realm of cryptocurrencies.” The expansion into the privacy cryptocurrency area is intended to keep pace with newer blockchain implementations and demonstrate that the DHS possesses sufficient extensibility to deal with the threat posed by illegal hidden transactions.

An excerpt from the document reads:

“A key feature underlying these newer blockchain platforms that is frequently emphasized is the capability for anonymity and privacy protection. While these features are desirable, there is similarly a compelling interest in tracing and understanding transactions and actions on the blockchain of an illegal nature. To that end, this proposal calls for solutions that enable law enforcement investigations to perform forensic analysis on blockchain transactions.”

The proposal identifies 3 phases of research. The first involves designing a blockchain analysis ecosystem, building on and around Zcash and Monero to enable forensic analysis for homeland security and law enforcement applications using cryptocurrency. The second phase involves prototyping and demonstrating the blockchain forensic technologies already designed, while the third phase is the implementation of blockchain forensic analytics for government and commercial uses by assisting with law enforcement operations as well as anti-money laundering compliance.

The move signals a figurative touching of gloves as the US government prepares to take on censorship – resistant blockchain implementations as part of its efforts to make sure that cryptocurrencies are not used to enable money laundering ,tax evasion and terror financing. CCN reported in September that a group of US government agencies led by the IRS have awarded several contracts worth millions of dollars to blockchain monitoring firms like Chainalysis as part of this effort.

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Last modified: May 20, 2020 2:18 PM UTC

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David Hundeyin @DavidHundeyin

I am a busy Nigerian writer, journalist and writer with an interest in tech and finance. When I'm not contributing to CCN and traveling around Africa, you can catch me contributing to CNN Africa, or in the writers room at 'The Other News', Nigeria's weekly answer to 'The Daily Show' with nearly 2 million viewers. My work on 'The Other News' was featured in the New Yorker Magazine, and that was then cited in the Washington Post so I'm not sure that counts as a feature but I'll definitely mention it too! I have been nominated by the US State Department to take part in the 2019 Edward R. Murrow Program for journalists under the International Visitors Leadership Program. I also like hamsters. You can reach me on Twitter at _David_Hundeyin

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