Exchanges May Work With Law Enforcement Over Privacy Coins Like Monero
Privacy coins like Monero are designed to avoid being tracked when used for transactions. However, the reported kidnapping of a Norwegian for which alleged kidnappers are demanding a ransom payment in Monero (XMR) has raised suspicions and questions on the fate of privacy coins.
Anne-Elisabeth Falkevik Hagen is the wife of the 172nd richest person in Norway, Tom Hagen, according to a Norwegian financial newspaper, Kapital. Her kidnap which was made public this week and kidnappers are now seeking approximately $10.3 mln for her release, has generated much media attention globally.
It wasn’t a surprise that questions about privacy coins, especially Monero, were among the first to be asked when the Poloniex crypto exchange team held a Ask Me Anything (AMA) session on Reddit on Thursday Jan. 10. The Chief Compliance Officer of Circle-run Poloniex, Robert Bench, wouldn’t say that privacy coins like Monero pose a regulatory threat or expose exchanges that list them to potential sanctions. Rather, he says law enforcement agencies can request information from exchanges if and when needed though educating users to understand how these coins are used is key.
He says the law enforcement community globally understands that crypto can be used to fund crime but “as they get smarter every day in this space, they’ll request information from firms like Circle where they think such transactions may have occurred on the platform.”
Bench also admits that though “these blockchains are opaque now, I wouldn’t underestimate the ability of smart industry and government participants to find solutions to provide transparency on these coins.”
Despite the regulatory and law enforcement attention it gets, Monero’s developers say they simply created a coin that protects privacy and it serves legitimate use even for those who don’t want others to know what they buy.
A Bloomberg-backed study shows that the largest opportunity for cryptoassets will be in store of value markets to drive substantial upside particularly for Monero and Bitcoin in the next decade. However, unlike Bitcoin, Monero’s transaction history is completely hidden. It adds that the largest opportunity within the privacy coins and their networks will be unlawful activities.