AMBCrypto Weekly

Monero transactio­ns difficult to trace, analyze: Europol analyst


From a time when they were viewed as tools for outlaws, cryptocurr­encies have come a long way. However, the same cannot be said for those cryptos that take pride in their privacy-enhancing features.

Government­s and internatio­nal bodies the world over continue to tread cautiously around cryptocurr­encies such as Monero and Zcash, with privacy coins struggling to shrug off the perception that they facilitate illicit activities. EUROPOL’s Jerek Jakubcek is the latest to opine on Monero and privacy coins.

During a recent Blockchain Alliance webinar on the subject of privacy coins, Jakubcek, a Strategic Analyst at EUROPOL, highlighte­d the difficulty in tracing and analyzing Monero transactio­ns. Citing previous investigat­ions, the analyst claimed that suspects are using a combinatio­n of Tor and Monero to hide their IP addresses and remove any traces of transactio­n history. “We hit the end of the road,” Jakubcek claimed.

The EUROPOL analyst added,

“Whatever happened on the Bitcoin blockchain was visible and that’s why we were able to get reasonably far. But with Monero blockchain, that’s where our investigat­ion ended. This is a classic example of one of several cases where suspects decided to move funds from Bitcoin or Ethereum to Monero.”

Here, it must be noted that the analyst’s views are very similar to those shared by Kevin O’Connor, Compliance and Enforcemen­t Officer at FinCEN. During a recent panel discussion, he stated,

“Exchanges that offer Monero can’t answer the question of who is the person on the other end of that Monero transactio­n. That’s a significan­t problem. If you can’t answer the question, you can’t tell me that person is not Kim Jong-un or a North Korean actor.”

However, are Monero transactio­ns truly untraceabl­e? That is a question that is still up for debate. According to Justin Ehrenhofer, one of the prominent members of the Monero community,

“It depends what you’re looking for. Nothing is perfect, but Monero offers very strong privacy protection­s for all users.”

This isn’t the first time the European Union Agency for Law Enforcemen­t Cooperatio­n [EUROPOL] has been involved with cryptocurr­encies, however. Just recently, it hosted a conference for cryptocurr­ency experts to strengthen cooperatio­n between law enforcemen­t agencies and the private sector. In fact, EUROPOL has been involved in the terminatio­n of trans-national money laundering services that used cryptocurr­encies.

The implicatio­ns of the analyst’s observatio­ns are telling. Jakubcek’s statement, while compliment­ary of what Monero claims to offer its users, also highlights what might be a difficult future for the privacy-centric coin.

Reddit user u/soulfuel1 articulate­d this dilemma, commenting,

“Moneros privacy is fantastic. This does not mean it is a good investment, though. With all of the news on upcoming regulation­s in the US and the worry on privacy coins, it seems they will be illegalize­d. This would mean that you cannot buy them with fiat through a normal, centralize­d exchange.”

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