IRS Announces a Bounty Worth $625,000 to Decrypt the Traceability of Privacy Coins

Ritika Sharma
Ritika Kumari Sharma is an Economics Honors graduate from the University of Calcutta. She is completely into finance and believes that cryptocurrencies are the future. She is an enthusiast learner about the cryptocurrency and blockchain technology.
  • IRS of the US have put up a bounty of $625,000 for one who breaks crypto network privacy
  • The IRS will select applications till September 16th and fund the selected entity in mainly two stages to facilitate the development of the project.
  • IRS signed a contract with Blockchain Analytics and Tax Services LLC worth $250,000

The Internal Revenue Service of the United States has announced a bounty of $625,000 to anyone who can break past the untraceability feature of the privacy determined Monero (XMR) cryptocurrency network or the Bitcoin Lightning Network. 

Illicit Activities Done Using XMR

Previously, many times we have seen Monero being used by criminal organisations to promote their illicit activities. XMR on many instances have been used to demand ransom. This is because unlike Bitcoin, Ether or Ripple it has very low traceability. Consequently, the demand for such privacy coins among criminal syndicates increased. As stated by IRS, there are very limited resources and tools to trace such privacy coins and other off-chain transactions. 

IRS Seeks to Trace Cryptocurrency Transactions in Privacy Robust Networks

The IRS wants to trace the crypto transactions on these networks and curb the criminals who make use of the privacy feature of the coins and contribute to illegal activities of money laundering, terrorist financing, identity theft, drugs financing and so on. The Federal entity is currently inviting applications and demonstrating working prototypes to the competent individuals and organisations who can facilitate this entire network tracing process. The IRS will select applications till September 16th and fund the selected entity in mainly two stages to facilitate the development of the project. The IRS will issue $500000 as soon the development team submits the privacy cracking product prototype. The outstanding amount would be given when the pilot run is successfully done. 

IRS Aims at Conducting the Task Without Using any Third Party Tool

Throughout the entire procedure, the IRS has a particular aim. It aims to sneak into the Monero and the Lightning Network protocols and keep a track of all the transactions that happen within the network.  However, some of the other objectives are: firstly to trace transactions without requiring any third party tool or network. Next, through this instance of tracking procedures of Monero, the IRS would be able to track similar privacy networks and their respective activities of bad actors. And most importantly, this would facilitate the IRS to implement and improve its technology but in a very cost effective manner. 

A few days the IRS signed a contract with Blockchain Analytics and Tax Services LLC worth $250,000. Clearly, the Federal Agency is doing its best to uphold the technology while implementing best measures to stop illicit activities.

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