Tools of the Trade: Monero and Privacy Coins Are Creating More Efficient Criminals

As if the cryptocurrency space wasn’t controversial enough, the emergence of privacy-focused coins such as Monero allow an end user to cloak their identity, making the currency an ideal choice for cyber criminals.
In Japan, the Financial Services Agency has banned any exchanges from listing such coins, and privacy coins in general are commonly at the forefront of regulatory discussion, primarily centered around their potential contributions to international money laundering.
Monero has already earned the crown for being the cryptocurrency most frequently involved in cryptojacking cases, and now, a new report out of Norway could bring to light additional fears around Monero’s privacy-related functions.
Wife of Norway’s Richest Man Held For $10M Monero Ransom
Multi-millionaire real estate investor Tom Hagen is listed among Norway’s richest men, however, his wealth has unfortunately made him and his family a target for cyber criminals.
Local Norwegian media outlet VG reports that Hagen’s wife, Anne-Elisabeth Falkevik Hagen, age 68, is suspected to have been kidnapped by a group of criminals who are demanding a $10.3 million ransom for her safe return. The criminals are requesting the ransom only be paid in Monero, likely as a way to hide any trace of their operation so they can get away with the crime unscathed.
Related Reading | US Government Aims to Make Privacy Coins’ Use Case Obsolete
Hagen’s wife disappeared suddenly from the family’s Lørenskog home on October 31st, and hasn’t been seen since. Police say they’ve been on the case for “several weeks,” but “have no suspects” in the case. The criminals only communicate over the internet, and have shown no evidence of Falkevik Hagen’s well being.
A note was discovered in the Hagen family’s household claiming that Falkevik Hagen would be killed if authorities became involved or if the Monero ransom wasn’t paid. Chief investigator Tommy Broeske, however, decided to “go public,” because they “need more information” to help track down the criminals and bring Falkevik Hagen home safely.
Monero’s Privacy Features Leave Investigators With No Trail to Follow
The case may not be as difficult for the authorities involved if it weren’t for Monero. Monero uses an obfuscated blockchain that prevents outside observers from determining the source, destination, or even the amount being sent in a transaction.
As a result, investigators on the case are still left with “no suspects,” despite having assistance from Interpol and Europol, and have Hagen’s wealth behind them.
Monero is quickly becoming the cryptocurrency of choice for cyber criminals. Santa Clara-based network and enterprise security company Palo Alto Networks released a report last year that suggested that roughly 5% of all Monero in circulation was mined as a result of malicious cryptojacking software, and that as much as 2% of Monero’s hashpower is derived from cryptojacking scripts.
Related Reading | Crypto Mining Malware Still Abundance Despite Market Decline
A branch of the United States Department of Homeland Security had already set its sights on Monero and the privacy coins, and may be working to develop tools to trace transactions on the blockchains of privacy coins. Should additional cases arise with such high profile individuals, privacy coins will eventually gain more notoriety and may eventually become banned elsewhere across the globe.
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US Government Aims to Make Privacy Coins’ Use Case Obsolete

A branch of the United States Department of Homeland Security (DoHS) is researching the possibility of using blockchain forensic analysis tools to better trace privacy coin transactions.
Privacy No More: US Government Preparing Forensic Analysis Tools
Among the biggest concerns surrounding cryptocurrencies like Bitcoin are fears that the emerging technology could facilitate money laundering by rogue countries, terrorist organizations, and cybercriminals.
However, the United States government has increasingly bolstered their ability to trace blockchain transactions, and have even learned how to track Bitcoin transactions back to the source and identify the wallet holder, as was the recent case where the U.S. Treasury sanctioned two men from Iran over their involvement in ransomware attacks.
Related Reading: Iran Is Prepping National Crypto to Evade US Sanctions
Next on the government’s agenda, is to begin looking into privacy-focused cryptocurrencies, such as Dash, Zcash, Monero, and more.
According to a pre-solicitation document published by the DoHS’s Small Business Innovation Research Program. The document, discovered by The Block, the U.S. government is allegedly investigating ways to better track transactions on the blockchains of the aforementioned privacy coins.
The report does speak positively about some of the aspects of privacy coins, but calls attention to transactions of “illegal nature” that occur using said cryptocurrencies. The eventual goal is to build out a platform that law enforcement agencies, government branches, and even private financial institutions can use to analyze and enforce important anti-money laundering laws.
Since the document is just a pre-solicitation, the notice is “merely an opportunity for interested parties to comment on or request information about the attached topic areas,” and doesn’t mean that the government already has such tools in its possession. It does, however, prove that the DoHS has concerns over privacy coins and their potentially illegal usage.
Japan Bans Privacy Coins, Will the United States Follow?
Zcash, Dash, Monero, and many other privacy-focused cryptocurrencies allow users to hide transaction and address data from anyone outside of the sender and receiver.
Monero is the cryptocurrency of choice for most cryptojackers as cybercriminals are able to easily hide their tracks. Monero has also unseated Bitcoin as the most-used cryptocurrency on the dark web, so it’s no surprise to see that the United States is joining Japan in addressing concerns around privacy coins.
Related Reading: Japan’s FSA Grants Self-Regulatory Status to Crypto Industry
In Japan, where cryptocurrency-related theft has skyrocketed, the Financial Services Agency (FSA) has imposed a ban against any cryptocurrency exchanges in the country from offering privacy coins. The ban took effect this past June, and the ripple effect is just now reaching the United States.
Coincheck, which suffered the largest cryptocurrency exchange hack in history at the start of this year, was among the exchanges that were forced to comply with the FSA’s ban, and removed Monero, Dash, Zcash, and Augur’s Reputation coin.
Featured image from Shutterstock.
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