Law enforcement in Japan arrested 18 people who were involved in laundering money with XMR. Japanese LE allegedly were able to trace the transactions. Does anyone know more about what happened?
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Japanese authorities have arrested 18 individuals involved in a Monero (XMR) money laundering operation, calling the privacy and transaction obfuscation features of its blockchain into question.
The arrests, facilitated by cross-border cooperation between nine regional police forces and Japan’s Cybercrime Special Investigation Unit on August 21, identified multiple individuals as part of an organized group that allegedly laundered proceeds through Monero.
Led by Yuta Kobayashi, the group is accused of conducting around 900 fraudulent transactions between June 2021 and January 2022, amassing approximately 100 million yen ($670,000). Using stolen credit card information, the group allegedly made fake purchases on the popular Japanese platform Mercari. The funds were then laundered through Monero, a privacy-focused cryptocurrency known for its difficult-to-trace nature.
Investigation Suggests Unprecedented Success in Tracing Monero Transactions Monero is one of the most popular privacy protocols in the crypto industry. Its native token, XMR, is fully fungible and used for online purchases with high privacy.
Moreover, XMR is also used for p2p payments, donations, and protection against financial surveillance.
Despite its strong privacy features, which include concealing transaction details and wallet balances through ring signatures and stealth addresses, authorities were able to track the flow of funds.
The investigation, conducted by Japan’s newly established Cyber Special Investigation Unit in collaboration with nine prefectural police departments, began in August. Kobayashi’s involvement was uncovered through communication on encrypted apps, often used by the group to coordinate their activities.
Japanese law enforcement’s apparent ability to track criminals using Monero in their recent investigation aligns with growing concerns over the privacy of XMR transactions. Recent video purportedly leaked from blockchain analysis firm Chainalysis suggests the firm has developed methods to trace transactions on the Monero blockchain, despite its reputation as a privacy-focused cryptocurrency.
Monero has long been touted for its anonymity and untraceable transactions, but the allegedly leaked video indicates that Chainalysis may be able to track the protocol’s transactions by leveraging their own “malicious” nodes, raising significant questions concerning the level of identity obfuscation privacy protocols are capable of delivering,
If law enforcement agencies could breach the protocol’s privacy features, a subsequent shift in how criminal groups attempt to obscure their operations could potentially see a shift toward alternative mixing services.