IRS: $1 million to track Monero and Lightning Network
IRS: $1 million to track Monero and Lightning Network

IRS: $1 million to track Monero and Lightning Network

By Alfredo de Candia - 11 Sep 2020

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In a recent document released by the Internal Revenue Service, Criminal Investigation (IRS-CI), the largest agency of the US Department of the Treasury, announced that it is offering $1 million for those who can find a way to retrieve information and track the Monero (XMR) blockchain and the Lightning Network (LN) protocol.

The document shows how experienced criminals have started using Monero as a means of payment and request for ransom, as seen in past attacks.

Monero (XMR) is preferred over Bitcoin (BTC) because the latter is only pseudo-anonymous and can be tracked.

The same applies to Lightning Network (LN), a 2-layer solution for bitcoin that allows quicker transactions, but also safer from a privacy point of view.

Tracking Monero and LN to fight crimes

The aim of the IRS agency would be to combat crime, which uses these tools to carry out illegal activity and evade the law, thus stealing funds from the victims.

From what can be read in the document, there are several solutions.

Those who want to pursue $1 million can opt for a PoC (Proof of Concept), software or a tool of some kind. At this stage, half a million dollars will be awarded.

The next phase is the testing phase, during which the proposed tools will be deployed in practice. For this phase, 125 thousand dollars will be prepared.

All proposals must be submitted by September 16th, 2020 and then the evaluation will start in order to select the best candidates.

The issue of privacy is certainly very important. In short, what is happening is that a government agency wants to “hack” projects that guarantee anonymity to identify criminal operations.

The problem, however, is that this is to the detriment of ordinary users, who use Monero or LN not to commit crimes.

Moreover, even if it is true that a small percentage of people use Monero or other privacy coins for illegal acts, it is the ordinary fiat currencies – especially cash – that are the main method used to carry out all sorts of crimes.

Of course, if a bug is found and the news spreads, nothing would prevent the Monero or Lightning Network team from updating their protocols and counteracting the IRS. 

Many companies and projects are working to track the suspicious movements of criminals, for example with the help of artificial intelligence.

In a workshop organized by Unicri some time ago, it was explained that to track Monero’s movements it would be enough to simply see the onchain movements.

Moreover, a tool made by Clueless Whale Alert allows to quickly observe some suspicious transactions.

Alfredo de Candia

Android developer for over 8 years with a dozen of developed apps, Alfredo at age 21 has climbed Mount Fuji following the saying: "He who climbs Mount Fuji once in his life is a wise man, who climbs him twice is a Crazy". Among his app we find a Japanese database, a spam and virus database, the most complete database on Anime and Manga series birthdays and a shitcoin database. Sunday Miner, Alfredo has a passion for crypto and is a fan of EOS.

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