Recently, the Monero (XMR) network was hit with a unique, first of its kind, Sybil attack. For 10 days straight, the attacker used their army of nodes to throw a wrench in the Monero network. According to the Reddit post giving insight into the attack, the attacker purposefully dropped transactions to ensure that the tx’s were not broadcast to the network, tried to exploit a bug to raise the possibility of the malicious nodes ending up in the peer list of an honest node, and recorded IP addresses in an attempt to match them with certain transactions, among many other dishonest actions.
Ultimately, the attack was unsuccessful, and the attacker did not have any effect on Monero’s highly controversial chain-privacy mechanisms.
Tracing Monero transactions
To date, only one blockchain analytic firm claims that they are capable of tracing Monero transactions–CipherTrace. Back in 2019, The U.S. Department of Homeland Security contracted with CipherTrace for a total of $3.6 million to create the Monero tracing tool.
What may have occurred in the recent Sybil attack was a blockchain analytic firm or a contractor testing out their ability to break Monero’s privacy. Monero uses an obfuscated public ledger, meaning anybody can broadcast or send transactions, but no outside observer can tell the source, amount, or destination. This is good for privacy-freaks and criminals but problematic for any money transmitting business.
Delisting Monero
Several digital currency exchanges have delisted Monero along with other privacy-coins because it is nearly impossible to know if individuals are laundering money via XMR. Research released in May by the Rand Corporation showed that Monero is one of the top three coins used in darknet market transactions.
Several exchanges have delisted Monero for this reason among many others; in April, Huobi Korea delisted Monero, and more recently, Shapeshift delisted Monero, DASH, and Zcash citing regulatory risks as one of the primary reasons.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.