zcash - Pwim.Net

IRS Hoping to Deanonymize Monero and ZCash Privacy Coins to Prevent Cybercrime

The Criminal Investigation Division (CID) of the Internal Revenue Service (IRS) is actively hiring private contractors to study and analyze privacy coins, as there has quite been a lot of fraudulent activities revolving around their usage.

Monero — a Popular Choice for Fraud

While the world has undergone coronavirus cybercriminals have been hard at work conducting their habitual illicit operations with the help of privacy coins.

Monero (XMR) and Zcash (ZEC) are quite an attractive option for cyber scammers, as they offer more anonymity and privacy than Bitcoin. The IRS is hoping to eventually deanonymize these privacy coins in order to put a halt to cyber fraud.

Why is Monero in Cybercrime?

XMR currently stands at the top of the list, for the most private cryptocurrencies on the market. Monero transactions operate on blockchain technology and are harder to trace, due in part to its ring signature and stealth addresses. Also, since Monero’s ledger is easy-to-access and is public, it is a popular choice that cybercriminals choose in order to carry out their illicit activities.

Zcash a Close Second

Another privacy coin that IRS is hoping to further investigate is Monero’s counter rival, Zcash. ZEC operates by using an anonymity tool called Zero-Knowledge-Proof, which allows users to transact with each other without revealing their true addresses to anyone.

In other words, this makes it hard for the receiver to trace and figure out the identity of the sender, and vice-versa. Because of its end-to-end-encryption property, Zcash users can remain anonymous despite conducting numerous online transactions.

Privacy Coins and Cybercrime

Privacy coins, such as Monero and Zcash, are common cryptocurrencies used in cybercriminal rings. In contrast, Bitcoin, which offers no anonymity, is less attractive to cyber scammers.

Depending on the privacy coin, anonymity levels differ. This type of cryptocurrency is attractive to cybercriminals, because it obfuscates the transacted amount, wallet addresses, the identities of both sender and receiver; it is also hard to trace the transaction trail.

Because of the anonymity offered by privacy coins, fraudulent activities such as tax evasion and money laundering are common with Monero and Zcash.

How the IRS Hopes to End CyberCrime

Based on the Request for Information (RFI) posted by the IRS Criminal Investigation program, private contractors working for them have developed software used to detect suspicious online transactions.

Illicit activities reported by various law enforcement agencies in the past will be gathered and analyzed in detail to prevent future cases of phishing and fraudulent behavior.

US law enforcers are also looking to come up with more innovative technological strategies to trace privacy coins, layer 2 off-chain protocol networks, and side chains.

Image source: Shutterstock

Crypto Exchange OKEx Delists Five Privacy Coins due to FATF Rules

Cryptocurrency exchange OKEx’s Korean arm will be delisting all five privacy altcoins including Monero (XMR), Dash (DASH), Zcash (ZEC), Horizen (ZEN), and Super Bitcoin (SBTC).

Announced by OKEx Korea on Monday, due to new international regulations, the support for transactions for the five altcoins will be ending on October 10, while withdrawal services will continue until December 10.

The decision to delist the five altcoins has been made considering that the coins violate the “travel rule” of the Financial Action Task Force (FATF).

As the five altcoins focus on privacy, the coins do not fulfill the requirements under the “travel rule” of the crypto guidelines issued by the FATF, which requires exchanges to collect and transfer customer information during transactions.

The customer information includes location information, the beneficiary, and the originator’s name, and account numbers. The privacy coins do not allow the collection of this information; therefore, the support must end for the five altcoins.

Currently, it still remains unclear whether these restrictions will be applied globally for the exchange.

Image via Shutterstock

Zcash Bug Could Leak Full Nodes with Shielded IP Addresses

A bug present in all Zcash (ZEC) source code forks could leak metadata—making it possible for IP address of the full nodes’ with shielded addresses (zaddr) to be found.Duke Leto, a core developer at Komodo (KMD), recently published a blog on his personal website revealing that, “A bug has existed for all shielded addresses since the inception of Zcash and Zcash Protocol.” Leto explained, “That is, Alice giving Bob a zaddr to be paid, could actually allow Bob to discover Alice’s IP address. This is drastically against the design of Zcash Protocol.”

A Common Vulnerabilities and Exposures (CVE) code has already been assigned to track the issue on Sept. 27.

According to Leto, everyone who has published or provided their zaddr to a third party is vulnerable—with the exception of users who have only used their zaddr over the Tor Onion Routing network or just to send funds. Leto warns that users should consider their “IP address and geo-location information associated with it as tied to their zaddr.”

Not just Zcash

Leto provided a non-exhaustive list, claiming that Zcash is not the only cryptocurrency affected by the bug. The cryptocurrencies included in the list are— Zcash, Hush, Pirate, Komodo smart chains with zaddr enabled by default, Safecoin, Horizen, Zero, VoteCoin, Snowgem, BitcoinZ, LitecoinZ, Zelcash, Ycash, Arrow, Verus, Bitcoin Private, ZClassic and Anon. Leto added a historical note, “ KMD was vulnerable to this <bug> in the past, but is no longer, since it no longer supports zaddrs. Safecoin (SAFE) took a similar route, and has disabled zaddrs, so they were vulnerable in the past but no longer.

Image via Shutterstock

The Electric Coin Company Officially Passes Zcash Trademark to Zcash Foundation

In a blog post published on Nov. 7, the Electric Coin Company (ECC) stated that it is officially passing the Zcash trademark registration and protection to the Zcash Foundation by signing a contract on Nov. 6. The Zcash Foundation is an independent non-profit-oriented organization that concerns itself with community engagement, financial privacy, and Zcash development is set to take charge of the Zcash trademark.

The Electric Coin Company put forward two primary objectives that made them pass the trademark to Zcash Foundation. These purposes include: to further the decentralization of Zcash and to respect and safeguard the voice of the Zcash community. However, the signing of the agreement has helped the two bodies to achieve three benefits which are: fortification of legal protections, strengthening of the company, and facilitating the zeal of their community’s voice.

As noted by the report, it was ECC who created and launched the Zcash digital currency in 2016 and since then has continued to back the running of the project via regulatory issues, education, research adoption, awareness, and engineering.

The new agreement transfers ownership of the trademark to the Zcash Foundation, stipulating the rights, obligations, and limitations therein.

None of the team has independent or exclusive authority over Zcash projects. The two sides must come together and agree if any project should be undertaken and if any project would be regarded as Zcash pioneered project. However, one of the teams has the right to terminate the agreement.

Image via Shutterstock

Zcash-Commissioned Research Find Cybercriminals Prefer Bitcoin Over Other Cryptocurrencies

Independent research commissioned by the Electric Coin Company (ECC), the parent firm of privacy-focused cryptocurrency Zcash, concluded cybercriminals are much likely to use Bitcoin over other digital assets.

Bitcoin dominated by illicit activities

Rand Corporation, an independent, US government-accredited research lab, was hired by Zooko Wilcox, the creator of Zcash and chairman of ECC as a third-party security organization to uncover critical lapses in the coin’s protocol.

Wilcox commissioned the research after speculation on social media about Zcash’s use in criminal organizations, such as the Dark Web and illegal money laundering outfits.

But Rand’s conclusions mean naysayers have been answered. The firm discovered no lapses in Zcash, not found any link with criminals opting for the privacy-centric token ahead of other options. Instead, Rand noted criminals may not even understand Zcash’s zk-snarks technology at all.

The 65-page long report focussed on three major aspects — money laundering, terrorism financing, and the illegal trade of banned goods and services — concluding “no evidence” of any illicit use of Zcash.

Cryptocurrencies have long powered the dark corners of the internet. The now-defunct Silk Road, an illicit marketplace, incorporated digital assets as a payment method back in 2010. Federal authorities nabbed millions in dollars worth of Bitcoin during a high-profile raid in 2014, post-which dark web sites moved to privacy-centric currencies like Monero.

Zcash only 1 percent on dark web

Zcash’s creation in 2014, followed by its subsequent popularity, led to internet critics calling the token a facilitator of illicit trade, with even major news outlets providing negative publicity to the ECC.

But Wilcox and ECC may breathe easy now. Rand’s findings made clear the token is not dominant on the dark web. Instead, it has a minor presence and is not preferred ahead of Bitcoin or Monero.

However, the report added that one percent of illegal websites accepted Zcash as a means-of-payment. 59 percent took Bitcoin, 27 percent accepted Monero, 12 percent accepted Ethereum and 1 percent even took Litecoin.

However, the Zcash-commissioned report does throw up some conflicting peculiarities.

A 2018 report by Europol concluded terrorist organization ISIS used Zcash for criminal financing and paying its vendors for weapons. Another firm, Chainalysis, which specializes in on-chain analytics, also reported Zcash’s popularity on the dark web. Blockchain.News also reported on a major bug in the protocol in 2019 that challenged its premise of total privacy.

Image via Shutterstock

Chainalysis Adds Compliance Support to Track Privacy Coins Dash and Zcash

Chainalysis has just launched support for two of the most popular privacy coins, Dash and Zcash. Privacy coins are cryptocurrencies with privacy-enhancing features that allow users to gain total anonymity when making blockchain transactions.

Privacy coins protect the identity of the users and the origins of the transactions, taking the anonymous and private nature of Bitcoin to the next level. Comparatively, Bitcoin protects some information, hence remaining pseudo-anonymous. The rest of the information, including transactions, addresses, and balances, is recorded in a public and permanently available ledger.

With around 63 different privacy coins in the cryptocurrency market, each project tries to offer the best approach to privacy, however, five projects overshadow the rest. These include Monero, Dash, Zcash, Verge, and Bitcoin Private.

Although privacy coins are known to be used for illicit purposes, research by the RAND corporation mentioned that 0.2 percent of all the cryptocurrency addresses mentioned on the dark web was either for Dash or Zcash.

Dash

Dash is a fork of the original Bitcoin code, similar to many other altcoins. Launched in 2014, Dash is a combination of the words digital and cash and is considered the first-ever privacy coin in the crypto history.

Dash uses an anonymization strategy revolving around PrivateSend, which hides transactions by mixing them together as a single transaction, which is then added to the blockchain.

Although Dash is known for its privacy features, only 9 percent of all Dash transactions make use of mixing transactions related to PrivateSend. This portion of Dash transactions take up a relatively small and declining percentage of Dash transactions, according to Chainalysis.

Zcash

Zcash uses an anonymity tool called Zero-Knowledge Proof, which allows users to transact with each other without revealing addresses to anyone. These transactions on the Zcash network are verified, using zk-SNARKS, also known as Zero-Knowledge Succinct Non-Interactive Argument of Knowledge.

Launched in 2016, Zcash (ZEC) also allows the encryption of blockchain activity, known as shielding, and Zcash provides this using shielded pools. Of the transactions that interact with a shielded pool, only 6 percent is completely shielded, and around 14 percent of all Zcash transactions involve shielded pools.

Chainalysis claims that it can provide the transaction value and at least one address for over 99 percent of ZEC activity.

Bitcoins Used in Facebook Scheme to Scam Suicidal Victims Into Buying Drugs

A cybercriminal ring operation has been inciting Facebook users to employ Bitcoin and other cryptocurrencies, in exchange for drugs. This investigative report from the UK depicts the strategic techniques used to track down the unknown villains operating behind this devious scheme.

Drugs in Exchange for Bitcoins and Crypto

Officials who posed as a Facebook user communicated with the drug dealer by asking about the quality of the product. Facebook scammers claimed that their pills were the best because they had the most competitive prices and guaranteed fast delivery.

They then also disclosed that the pills were also effective for people who were suicidal. If one wanted to end one’s life once and for all, the illicit drugs that they sold would do the trick.

Other than selling poison for Bitcoin, these traders also gave instructions to clients on how to use the pills in an effective manner to end one’s life. They did not, at any moment, attempt to dissuade online clients from committing suicide. No online helpline or psychological resources were provided to the victims.

A common recurring theme with Bitcoins, Litecoins, Ethereum, Zcash, and other cryptocurrencies seems to be the use of these cryptos for illegal activities. Though cryptocurrencies are relatively safe, secure, and ensure faster delivery time than traditional institutional payouts, the guaranteed transparency of them can sometimes be problematic.

Facebook Scams, Ads—What Else is New?

Facebook scams are just the tip of the iceberg. For a long while, Facebook has been collecting data from users’ browsing history and Friends List for personal research purposes. The invasiveness of these methods has long been debated and talked of over and over again.

While there may not be a way to prevent the app from engaging in data collection completely, there are ways that one can curb it. Facebook is seen as being increasingly intrusive, as the app constantly prompts a user to allow access to one’s location, microphone, camera, contacts, and much more.

Depending on the phone, one can limit Facebook’s data collection by going into one’s phone settings and personalizing what one allows Facebook to have access to. Another method of restricting Facebook data collection is by going on the application directly and personalizing one’s settings.

Pandemic Politics—Facebook CEO Marc Zuckerberg Speaks Up

Since the US Presidential election is taking place in November, and POTUS (President of the United States) Trump is actively working on his Presidential Campaign, Facebook has taken a lot of heat in regards to the political advertising it has been engaging in.

Users have complained about the volume of propaganda through the form of political ads that they saw on their feeds.

On Tuesday, Facebook CEO Mark Zuckerberg spoke up and announced that the social network app would be changing tactics. From here on forward, US citizens would be allowed to opt-out of seeing ads on their social feed.

Zuckerberg says:

“Everyone wants to see politicians held accountable for what they say — and I know many people want us to moderate and remove more of their content. For those of you who’ve already made up your minds and just want the election to be over, we hear you — so we’re also introducing the ability to turn off seeing political ads. We’ll still remind you to vote.”

COVID19—Can Bitcoins Revolutionize the Economy, Post-Coronavirus?

As the world is experiencing a global recession, the majority of the crypto community believes that Bitcoin could benefit a global financial crisis.

Governments around the world have been scurrying to produce medical gear, which is scarce in some parts of the world. Genson Glier, the BlockToken Co-founder, said, “Most individuals will have some loss of faith in their government, especially given the crisis. This loss and lack of trust are just one of the reasons why BTC has been able to establish itself. I think people will see it as an additional asset class for wealth distribution, now more so than ever.”

Bitcoin and Ethereum win sentiment scores

A random sample population was surveyed to see whether people generally had a positive or negative outlook on cryptocurrencies. Eleven cryptocurrencies were used in the experiment. The results showed that Bitcoin and Ethereum generated the most positive outlooks, while Binance coin received the highest sentiment rate.

Microsoft Takes Down COVID-19 Cyber Criminals to Eliminate "Business Email Compromise" Attacks

Scammers have been taking advantage of the confusion caused by COVID-19 pandemic and the subsequent worldwide economic crisis in order to retrieve sensitive information and phish personal data from Microsoft users.

It was reported by Corporate Vice President of Microsoft, Tom Burt, that Microsoft users from at least 62 countries around the world have been defrauded by cyber criminals phishing for sensitive data. The online hackers operated by sending COVID-19 labeled files to a victim’s email account, which were purposely marketed in a way that incited users to click on the malware. Following that, malicious web applications were then able to access the victims’ Microsoft Office 365 account.

This is known as a form of Business Email Compromise (BEC) attack. It has become increasingly sophisticated and complex to prevent, as new software is constantly developing, and scammers have upgraded to more creative phishing schemes.

Luckily, following a court order issued by the US District Court for the Eastern District of Virginia, Microsoft has finally been able to seize control of the key domains in the cyber criminals’ infrastructure, in an effort of putting an end to cyberattacks targeting their multinational tech company.

FBI Internet Crime Reports

With cybercrime on the rise, the FBI’s 2019 Internet Crime Report indicated that BEC attacks figured among the most costly complaints, resulting in over $1.7 billion of financial damages. FBI also reported that from 2016-2019, businesses lost approximately $26 billion dollars due to fraudulent emails.

According to Safepost, the use of decentralized technology in emails have yet to be fully utilized and a blockchain-based solution would solve the majority of problems that traditional email providers faced. A decentralized email solution would entail that messages would be stored in shared ledgers. In other words, no single authority would be able to dictate how your data was used.

Monero Used in Cybercrime

With phishing attacks being increasingly common in the crypto world, virtual currencies, such as Zcash and Monero (XMR), are more and more favoured by scammers because of their privacy features. XMR stands at the top of the list for the most private cryptocurrencies on the market. Because it operates on blockchain technology and its network is obfuscated, Monero is a popular choice employed by cybercriminals in carrying out illicit cyber scams.

Europol Cybercrime Report Identifies Monero, Zcash, Dash and Privacy Wallets as Emerging ‘Top Threats’

Europol assessed the new developments in cybercrime in relation to the COVID-19 pandemic and identified certain cryptocurrency wallets and dark web marketplaces as top threats.

Privacy coins increasingly used in crime

According to the report, privacy-enhancing wallets have emerged as a top threat, due to the rise in popularity of privacy coins. Privacy enhancing coins such as Monero, Zcash, and Dash were named in the assessment for increasingly being leveraged as payment methods on the dark web. Per Europol’s Internet Organised Crime Threat Assessment (IOCTA) report of 2020:

“Monero is gradually becoming the most established privacy coin for dark web transactions, followed by Zcash and Dash.”

Other altcoins that have gained more traction on dark web marketplaces include Ethereum and Litecoin, but the preferred payment method was still allocated to Bitcoin. This is mainly due to the mainstream cryptocurrency’s reputation and mass adoption, among other things.

Privacy-focused wallets and dark web networks

In addition to favouring hardware wallets for private key and crypto storage, cybercriminals have also increasingly relied on “privacy-enhanced wallet services using coinjoin concepts” and centralized mixers to launder and store their crypto funds. Coinjoin protocols typically operate by merging different transactions originating from non-related users into one transaction. In the Europol report, popular cryptocurrency wallets using this concept included the Wasabi and Samurai wallets. Although these wallets do not completely erase the trail of the transaction, it makes cryptocurrency tracing a lot harder.

As for the preferred dark web protocol, the Tor network remained the most popular choice among criminals. However, an increased interest directed towards decentralized privacy-focused platforms has been observed this year. The report stated:

“The emergence of decentralised privacy-oriented platforms is not a new phenomenon in the Darkweb ecosystem, but they have started to increase interest over the last year.”

Criminals have increasingly resorted to such platforms to sell illicit goods, with OpenBazaar leading the pact as a “high priority threat.” The network was said to have marketed its services through its mobile platform Haven, which has already been downloaded thousands of times on Android.

The Europol report echoes an assessment the agency released in June that indicated that $50 million in Bitcoin had been deposited in Wasabi wallets, with 30% originating from dark web markets.

Most crypto transactions are not related to cybercrime

However, according to data from Europol, although the level of cybercrime has significantly grown, “the legitimate use of cryptocurrencies grew at a much faster rate.”

According to the report, though cryptocurrencies have facilitated payments for all sorts of cybercrime, ranging from sextortion, ransomware, data theft, and even COVID-19 related scams this year, data assessing the year 2019 indicates that the percentage of cryptocurrency transactions linked to cybercrime still translates to only 1.1% of total transactions.

ZCash Celebrates First Halving, Unveils Canopy The Network's Fifth Upgrade

ZCash has undergone its first-ever halving, an event that coincides with the launch of Canopy, the fifth network upgrade for the ZCash privacy coin protocol.

As announced by the Electric Coin Company, the tech company behind the development of the ZCash privacy coin, the first halving was activated at block 1046400, more than four years when ZCash was first mined on October 28, 2016.

The first halving event of ZCash which comes after Bitcoin’s fourth halving event reduces the reward that goes to the network’s miners in order to reduce the rate at which the coin is mined. Following this halving event, the reward that goes to miners is now reduced from 12.5 ZEC per block to 3.5 ZEC per block according to nicehash.

The halving event as noted earlier also coincides with the launch of the network’s fifth upgrade ‘Canopy’. With Canopy comes unique changes to the network most notably the removal of the controversial Founder’s Reward and ushers in the creation of a new development fund. The developed fund is targeted at enticing new community members who wish and have the capabilities to improve, build upon, extend, and support Zcash.

ZCash Seen as a Threat, Can Canopy Make a Difference?

The privacy model of ZCash has constantly attracted backlash from regulators around the world. Recently, Europol identified ZCash among a list of other privacy coins as an emerging threat in cybercrime. Due to its private nature, cybercriminals are more likely to demand payment using ZCash as such transactions are untraceable.

Besides the threats seen by Europol, the US Internal Revenue Service continues to devise means to deanonymize ZCash and Monero in a bid to prevent cybercrime. With the backlash that surrounds ZCash, the rollout of the Canopy network upgrade by the Electric Coin Company, aims at building the network’s transparency within its community.

Whether the network upgrade will have much impact on the authorities’ perception of the potential threat of ZCash remains unclear.

Image source: blockchain.news