U.S. IRS chose Chainalysis to decrypt Monero transactions

The U.S. Internal Revenue Service (IRS) chose two companies to develop tools for transaction tracking of Monero cryptographic software. These were Chainalysis and Integra FEC.

In September, the IRS announced that it would pay up to $625,000 to anyone who could offer an effective method to decrypt Monero private transactions. The contract for this amount will be awarded to each of the companies, resulting in IRS costs, subject to other requirements, of $1.25 million.

According to the conditions announced earlier, the initial payment will amount to $500,000. This money will be used to develop the proposed solution. If it is tested and approved, companies will be entitled to an additional $125,000.

The IRS representative stated that they received applications from 22 companies and selected two of them. The process used "comparative analysis" methods. Chainalysis tools are widely used in the industry and by regulators. Integra FEC has a multimillion dollar contract with the U.S. Securities and Exchange Commission (SEC) for "other technical consulting services.

A few weeks earlier, a rival CipherTrace announced that it had already created a tool to track Monero transactions for the U.S. Department of Homeland Security. Community members questioned whether any solution of this kind would allow analysis of Monero block data with sufficient accuracy.

The IRS considered this task feasible. Under the terms of each contract, developers must submit working proposals within eight months. Thus, the results of their work may become known by the next summer.

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