IRS to Pay $625K to Crack Monero, Crypto Proponents Scoff at Contract

The U.S. Internal Revenue Service (IRS) wants to pay a contractor $625,000 if they can crack layer-two privacy schemes and the privacy-centric crypto asset monero (XMR). The tax agency says that the entity has “limited investigative resources” for tracing these types of cryptocurrency transactions.

The United States tax agency wants to obtain a solution to trace the digital currency monero (XMR), alongside “Layer 2 network protocol transactions” like the Lightning Network. The IRS will distribute $625,000 to “one or more contractors” in two phases; $500k will be distributed after the first proof-of-concept, then another $125k following a full examination and launch.

“Currently, there are limited investigative resources for tracing transactions involving privacy cryptocurrency coins such as monero, Layer 2 network protocol transactions such as Lightning Labs, or other off-chain transactions that provide privacy to illicit actors,” the IRS contract offer notes.

IRS to Pay $625K to Crack Monero, Crypto Proponents Scoff at Contract
The intro to the IRS contract for someone to crack monero (XMR) and layer two privacy solutions.

The contractor will provide “weekly status reports of progress” and work with members of the CI Cyber Crimes unit, and Cyber Special Agents.

“All documentation, data, source code, and software developed shall be provided to IRS-CI.” Essentially there are three goals for the contractor to accomplish, which include:

  • Provide information and technical capabilities for CI Special Agents to trace transaction inputs and outputs to a specific user and differentiate them from mixins/multisig actors for Monero and/or Lightning Layer 2 cryptocurrency transactions with minimal involvement of external vendors
  • Provide technology which, given information about specific parties and/or transactions in the Monero and/or Lightning networks, allows Special Agents to predict statistical likelihoods of other transaction inputs, outputs, metadata, and public identifiers with minimal involvement of external…

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