The FBI is Worried Criminals Might Use the Private Cryptocurrency Monero – CoinDesk

The privacy-focused digital currency monero has captured the attention of the Federal Bureau of Investigation (FBI), which has expressed concerns overits use among criminals.

Joseph Battaglia,a special agent working at the FBIs Cyber Division in New York City, said during an event last week that widespread use of the increasingly popular cryptocurrency might impact the way the agency conducts investigations.

Addressing a group of about 150 law students at New York's Fordham University, hesaid:

"There are obviously going to be issues if some of the more difficult to work with cryptocurrencies become popular. Monero is one that comes to mind, where its not very obvious what the transaction path is or what the actual value of the transaction is except to the end users."

Launched in April 2014, monero (XMR) is a cryptocurrency with enhancedprivacy features. A fork of the Bytecoin codebase, monero leverages identity-obscuring ring signatures to make it unclear which funds have been sent by whom and to whom.

The cryptocurrency saw its price soar in 2016, climbing from about $0.50at the beginning of the year to about $12, a 2,760%increase.

Since 2013, the agency has seen "enormous growth" in the number of cases involving digital currencypayments, according to Battaglia. Of those, 75% involved bitcoin, he said, though he mentioned litecoin and monero as other cryptocurrencies the agency has encounteredthus far.

TheFBI Cyber Division looks into a diverse range of online criminal activity.

In 2015, the agency reportedransomware losses of$18mfroma single type of software. Since at least last October, the agency has been investigating a $1.3m bitcoin theft tied to the hacking of theBitfinex exchange.

Battaglias statements came afterhis "high-level" account of a typicalcryptocurrency investigation given at theevent, which oneof a series of blockchain workshops co-hosted withIBM.

Other panelists included Brigid McDermott, vice president of blockchain business development at IBM; Dan Ramsden, a Fordham Business School adjunct professor; and Gregory Xethalis, a partner at law firmKaye Scholer.

Following the event, the special agent said he couldn't provide additional details specifically pertaining to the FBIs investigative techniques surrounding monero when asked by CoinDesk.

Duringthe panel, however, Battaglia described the FBI as "a reactionary organization", addingthat, instead of trying to predict the direction that cryptocurrency use might go, the agency has adopted await-and-see approach.

Battaglia concluded:

"Were going to look at what catches on, and what becomes mainstream, and then were going to keep an eye on that, because usually not long after that is when you start to see some of the fraud and some of the more nefarious uses of that technology."

Photo credit: Bruce Gilbert / Fordham University

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