The US tax agency, the Internal Revenue Services (IRS), has recently offered up a bounty of up to $625,000. This bounty is for anyone that can break the supposedly untraceable privacy coins, such as Monero. Alongside this, the bounty extends to being able to trace transactions within the Lightning Network of Bitcoin.
The Task At Hand
The official proposal was published last week, and details that the IRS will accept submissions by way of working prototypes until the 18th of September, 2020. Should these prototypes be accepted, the applicants will receive an initial patent of $500,000
Through eight months, it’s expected that the applicants will use this grant in order to develop their prototype into a working concept. From there, a pilot test must be completed and subsequently approved by the government, where a further grant of $125,000 will be awarded to the applicants.
Trying To Crack Down On Crypto-Powered Crime
The IRS made it clear that it was seeking one or more contractors in order to provide this new innovative solution for privacy coin tracing. In particular, the IRS is seeking data, expert tools, algorithms, source code, as well as software development services.
This announcement comes as one of the primary objectives in order to help the IRS Criminal Investigation (CI) special agents. These agents must find a way to trace transactions, such as dates and times, identifying the wallets in question, as well as the amounts transferred themselves.
With the use of these tools, the agency is hoping to predict future transactions of addresses flagged for suspicious activity. A key stipulation of these final products is that CI must also be provided with full control, as well as the ability to further modify or develop this solution. Through doing so, the IRS is aiming to be independent of any form of external vendors.
Cracking The Criminal Privacy COin
As privacy coins flourished, Monero made itself clear as the virtual currency of choice among criminal organizations, as opposed to the more traceable Bitcoin and other assets. In particular, the ransomware group, Sodinokibi, uses Monero exclusively for transactions and ransom demands, due to concerns it has in keeping its privacy.
Criminal syndicates have only seen a growth in demand for privacy coins. This comes as a direct results of the ever-increasing crypto forensic capabilities of authorities, employing private contractors such as Chainalysis, as well. Chainalysis, in particular, has been a key aid for law enforcement tracking crypto transactions.
Through doing so, the firm has succeeded in aiding the battle against terrorist financing, money laundering, and child abuse. Just a month ago, Chainalysis served as a key part in the eradication of three terrorist organizations.