The United States federal government continues to view the privacy-centric cryptocurrency Monero (XMR) as a potential tool for cybercriminals. An agent with the United States Department of Homeland Security (DHS) told CNBC recently that cybercriminals are “looking more closely at other currencies like Monero and Ethereum.” Earlier this year an FBI agent with the bureau’s Cyber Division told reporters at a conference that the FBI fears criminals will begin to increasingly turn to cryptocurrencies that protect financial privacy, such as Monero. Since the introduction of the world’s first cryptocurrency in 2009 newer, more private cryptocurrencies have been developed. What is perhaps the most privacy-enhancing cryptocurrency currently is Monero. Other privacy-centric cryptocurrencies such as ZCash and DASH do not seem to provide as much privacy for every single transaction as Monero does.

When Bitcoin first debuted in 2009, many mistakenly believed that the first cryptocurrency was as private as cash. This misconception arose from a misunderstanding of the underlying technology, the blockchain, which publicly records the bitcoin addresses of the sender and receiver, as well as the amount and the date and time of transactions. The realization that Bitcoin was not nearly as anonymous as was popularly believed led to the creation of mixing services, also known as tumblers. These services help to anonymize a user’s bitcoins, but researchers have discovered ways which can make even mixing services incomplete solutions to make Bitcoin transactions private.

In 2011 the Silk Road launched, becoming the first darknet market to accept cryptocurrency, when it made Bitcoin the official currency of the marketplace. Since the death of Silk Road, newer darknet markets began to embrace Monero. Earlier this summer the darknet market Wall Street Market began accepting Monero deposits and allowing it to be used for purchasing products from vendors on the market. Last year, the now defunct darknet markets AlphaBay and Oasis Market both began to accept Monero. According to the criminal complaint filed in the United States District Court for the Eastern District of California, nearly 12,000 Monero coins were seized by law enforcement agencies from AlphaBay’s servers. Earlier this year the now defunct darknet market The Open Road also implemented Monero.

“What the criminals are starting to see, and some of the trends we’re picking up as well, is that bitcoin also works equally just as much against you as it does for you,” the Department of Homeland Security agent said to CNBC. While the agent suggested criminals were moving to Ethereum, that cryptocurrency has similar privacy issues as Bitcoin. While Ethereum may have privacy issues, that hasn’t slowed down cybercrime revenues in Ethereum, which have soared into the equivalent of hundreds of millions of US Dollars. One of Monero’s competitors which does aim to increase financial privacy is ZCash, however, most ZCash transactions are not in fact private transactions. Law enforcement seized nearly 3,700 ZCash coins from the late Alexandre Cazes, the alleged mastermind behind AlphaBay, according to the criminal complaint filed in US federal court. At the time AlphaBay went down, the marketplace was beginning to enable ZCash transactions.

While it is not possible to know the true number of cryptocurrency transactions being conducted by criminals, Blockchain Intelligence Group, a blockchain analysis company, claims that illicit Bitcoin transactions have decreased from half of all transactions to less than 20% of all transactions. The co-founder of Chainalysis, another blockchain analysis company, claims that law enforcement has diminished trust in darknet markets. Similar claims were made when the Silk Road was taken down by law enforcement, but in fact there was a boom in the number and usage of darknet markets after Silk Road was taken offline.

The DHS agent that spoke with CNBC also talked about the take down of the Bitcoin exchange BTC-e. In that case, the United States government is alleging that BTC-e was involved in laundering billions of US Dollars worth of cryptocurrencies. The DHS agent boasted about the improved efforts of law enforcement to track criminal transactions through the blockchain and hold exchanges accountable. The agent commented on the reputability of Bitcoin saying, “I think it’s a lot more legitimate than people give it credit for.”

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