The U.S. Internal Revenue System, has granted a contract to Chainalysis to develop a tool that will allow authorities to track privacy coins like Monero and second-layer solutions like Lightning Network. According to an official post, Chainalysis won the contract along with Integra FEC LLC, a Texas-based forensic data analysis company, founded in 2012 and focused primarily on the field of traditional finance. As reported earlier, the IRS contract sought, in general terms, to deanonymize the crypto anonymization initiatives such as privacy coins, second layer solutions, mixers, tumblers, etc.
Chainalysis will track Monero and Bitcoin on the lightning network.
Neither Chainalysis, the IRS, or Integra FEC have provided any comment on the IRS contract. Ricardo Spagni, a former Monero lead developer and privacy advocate, is also silent about the same. Different government agencies have been trying autonomously to find solutions that would allow them to use technology to “beat” cryptocurrencies at their own game. U.S. President Donald Trump had previously commanded the Secret Service to protect the United States’ financial interests by monitoring cryptocurrencies transactions. Privacy centric coins have been claimed to be useful in the freshworld we live in.
Regulators repeat the same rhetoric for regulating crypto.
The main argument use for regulating crypto is that these tokens are used for illicit activities, even with reports showing that criminals prefer traditional banks over cryptocurrencies. The IRS has taken additional steps to tax crypto transactions. The Pentagon recently started hiring a crypto analytics service to “quickly detect criminal and suspicious cryptocurrency transactions” and had previously developed a war game in which Generation Z used cryptocurrency to rebel against the system. The FBI is also interested in tracking cryptocurrency transactions. A recent report revealed that the FBI’s workforce tracked down the blockchain to end a criminal network that used Monero and other cryptocurrencies to finance itself.