The agency is offering up to $1 million to developers who can create technology to track Monero and Bitcoin Lightning Network transactions.
Despite its popularity among dark web drug dealers and hackers who demand hefty ransoms to unlock their victims’ networks, tracking bitcoin has never been a difficult task for the feds and cops who go after supposedly anonymous cybercriminals online. Therefore, more tech-savvy criminals use cryptocurrencies such as Monero, which promise a high level of anonymity.
As criminals begin to master new technologies, law enforcement agencies are also not far behind. The IRS is now offering up to $625,000 for new tracking tools for the privacy -focused cryptocurrency Monero and new blockchain technology such as the Bitcoin Lightning Network.
The agency is looking for new solutions to help track transactions made with Monero or another privacy-preserving cryptocurrency. The IRS wants to be able to see the algorithms and source code of these tools in order to integrate them into existing solutions and – ideally – to minimize the involvement of external providers in accordance with the request for proposals.
“We are looking for solutions that will provide the best results for tracking transactions with obfuscated Monero and Lightning cryptocurrencies," the IRS wrote.
The IRS plans to pay whoever proposes a solution that meets their requirements $500,000 for the first phase of software development and proof of concept, which will last eight months, and an additional $125,000 for the second phase of testing, which will last 120 days. The agency does not plan to select just one offer as it plans to spend around $1 million.
The developers who win the contract will work closely with IRS agents to develop technology that developers can offer elsewhere, as the IRS "does not intend to require the retention of any intellectual property" but simply provides a chance to continue using solutions with a "non-exclusive perpetual license" royalty-free on any source code developed with this funding,” the document says.
There are several companies that offer cryptocurrency tracking technologies such as Chainalysis, CipherTrace, and Neutrino, a startup that was acquired by Coinbase.