Crypto intelligence firm Chainalysis and data forensics company Integra Fec have won a combined $1.25 million contract to provide tools that break the privacy-focused coin, monero, for the U.S. Internal Revenue Service (IRS).
Floated early September, the one-year contract specifically covers transactions involving monero (XMR) and second-layer payment solutions such as bitcoin’s lightning network (LN) – features considered by the IRS as conduits for criminal financial activity.
Privacy coins are primarily built for the purpose of hiding financial transactions from unwanted attention, such as law enforcement.
But the IRS is paying both Chainalysis and Integra up to $625,000 each – a total of $1.25 million – to do just that, trace obfuscated wallet addresses and transaction amounts.
Per the original request, the firms will be advanced $500,000 each to develop the required tracing tool, and then another $125,000 if the submitted solution proves successful and is approved. A working submission is due in eight months. Testing and development will occur in the ensuing120 days.
The IRS hopes that the solution will help it track transactions to a specific user, identify specific transaction details as well as provide specific information on network activity.
Chainalysis has previously said that it can track 99% of transactions involving Zcash, and almost all of Dash’s – coins that both fancy themselves as private and untraceable.
But that’s only because the majority of users do not utilize the optional privacy-enhancing features available on the two blockchains.
What do you think about the IRS targeting privacy coins? Let us know in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.