So users—particularly criminals and members of fringe far-right groups—hoping avoiding the regulatory eye have turned to a new kind of cryptocurrency: privacy coins.
Major crypto exchanges like Coinbase use KYC verification to comply with anti-money laundering regulations, and Bitcoin address information from Coinbase was one tool authorities used to track down the perpetrators of the Twitter hack.
Monero, established via a split from the cryptocurrency Bytecoin in 2014, both obscures the digital addresses of those involved in a given payment and hides the value of every crypto transaction.
In essence, this is transaction mixing; instead of just one account sending a transaction, a “ring” of users signs the transaction and “send” it alongside the actual originator of the payment.
This level of anonymity has made Monero the coin of choice for ransomware groups, like the Russian-tied hacking group Revil—which was linked to the hacking of meatpacker JBS this summer.
However, given the anonymity of the Monero ledger, it is still rather difficult to track Ray’s actions and transactions on the platform—especially because each transaction sent on the platform is split into multiple anonymized transfers of differing values.
He previously pleaded guilty to committing assault at the Charlottesville rally, and is one of the people named in the civil lawsuit regarding the Charlottesville rally playing out in court right now.
Privacy coins also allow nonactivists to hide their financial support for white nationalist and far-right causes.
It is extraordinarily volatile.” The value of Monero has ranged from a low of $109 to a high of $517.62 per coin over the past year, and it can experience significant shifts in value over the course of mere hours.
But of course, they’re going to be super expensive and only available in law enforcement.” For example, blockchain analytics firm CipherTrace released a Monero tracing tool developed with Department of Homeland Security funding—which costs $16,000 per user for access.
Unfortunately, the task of tracing will be made harder by the recent announcement of atomic swaps between Monero and Bitcoin that allow crypto holders to exchange the two coins without the need for a third-party exchange service—eliminating one of the easiest entry points in identifying Monero transactions.
But these coins are running up against the same problem as encryption and other technologies to protect privacy: They can’t allow for dissidents, activists, and people from marginalized communities to stay safe without also sheltering criminals and purveyors of hate.