The largest privacy coin by market cap, Monero (XMR), remains at the forefront of ongoing discussions surrounding the traceability of cryptocurrencies. On July 16, an anonymous individual sent a series of messages to the bitcoin address associated with the recent Twitter hack, recommending that they use monero instead of BTC.
This comes shortly after a leaked FBI document revealed the bureau’s failed attempts to trace the monero transactions of darknet drug dealers.
Twitter Hacker Told: Use Monero Instead
On July 16 the Twitter profiles of numerous high profile celebs such as Elon Musk, Bill Gates, Kanye West, Warren Buffett, Barack Obama and Jeff Bezos were hacked in order to extract bitcoin from gullible followers.
The hacker posted messages promising two-to-one returns if they sent BTC to a particular address. By the time Twitter had taken action to stop the hack, the attacker had made away with approximately 17.34 BTC, worth around $160,000 at time of writing.
But perhaps most interestingly of all, the hacker received advice from a helpful individual who spent nearly $12 in BTC to send the following message to the associated address:
“Just Read All – Transaction Outputs As Text – You Take Risk When Use Bitcoin – For Your Twitter Game – Bitcoin is Traceable – Why Not Monero.”
Each part of the message was sent along with trace amounts of Bitcoin, amounting to around $0.50. Due to the size of Bitcoin transaction fees, which average $2.41 at time of writing, more than $11 was spent to send the $0.50 worth of transactions.
XMR Beyond the Reach of FBI
Whoever advised the Twitter hacker to use monero may have seen the recently leaked classified FBI documents which shone a light on the darknet uses of monero. Specifically, the document revealed the bureau’s failure to trace the XMR transactions of drug dealers on the darknet.
The internal memorandum focused on the pattern of behavior which saw drug dealers swap their bitcoin for monero via the MorphToken exchange. The document states:
“The FBI assesses Darknet Market (DNM) actors likely convert illicitly obtained Bitcoin into anonymity-enhanced cryptocurrency (AEC) Monero using the MorphToken cryptocurrency exchange, impeding law enforcement’s ability to trace the destination of the proceeds.”
The FBI used a proprietary tool to track the bitcoin transactions from various darknet drug markets, including Apollon and Cryptonia. The document notes that the MorphToken exchange was likely chosen due to its lack of KYC requirements. Users can exchange cryptocurrency on MorphToken completely anonymously, causing a problem for law enforcement.
The Future of Privacy
The FBI refers to Monero as an “anonymity-enhanced cryptocurrency” (AECs). The document speculates that the spread of AECs could severely hinder the future ability of authorities to track criminal transactions and states:
“More widespread criminal adoption of AECs will severely limit the ability of law enforcement to trace cryptocurrency involved in illicit activities with existing investigative techniques.”
The emergence of privacy-centric cryptocurrencies like Monero presents a headache for the three-letter agencies. While it enables middle-class, tech-savvy kids to buy weed without legal reprisal, it also provides cover for the very worst of the criminal underworld.
At time of writing Monero is the 15th largest cryptocurrency by market cap, holding a total value of just under $1.2 billion.