Monero

In April 2017, researchers highlighted three major threats to Monero users' privacy. The first relies on leveraging the ring signature size of zero, and ability to see the output amounts. The second, "Leveraging Output Merging", involves tracking transactions where two outputs belong to the same user, such as when they send funds to themselves ("churning"). Finally, "Temporal Analysis", shows that predicting the right output in a ring signature could potentially be easier than previously thought.[17] According to a blog post from Monero developers, they had already addressed the first concern with the introduction of RingCTs in January 2017, as well as mandating a minimum size of ring signatures in March 2016.[18] In 2018, researchers presented possible vulnerabilities in a paper titled "An Empirical Analysis of Traceability in the Monero Blockchain".[19]

In September 2020, the United States Internal Revenue Service's criminal investigation division (IRS-CI), posted a $625,000 bounty for contractors who could develop tools to help trace Monero, other privacy-enhanced cryptocurrencies, the Bitcoin Lightning Network, or other "layer 2" protocols.[5][7] The contract was awarded to blockchain analysis groups Chainalysis and Integra FEC.[7]

Monero is a common medium of exchange on darknet markets.[6] In August 2016, dark market AlphaBay permitted its vendors to start accepting Monero as an alternative to bitcoin.[6] The site was taken offline by law enforcement in 2017,[29] but it was relaunched in 2021 with Monero as the sole permitted currency.[30] Reuters reported in 2019 that three of the five largest darknet markets accepted Monero, though bitcoin was still the most widely used form of payment in those markets.[11]

Hackers have embedded malware into websites and applications that hijack victim CPUs to mine Monero (sometimes called cryptojacking).[8][31] In late 2017, malware and antivirus service providers blocked Coinhive, a JavaScript implementation of a Monero miner that was embedded in websites and apps, in some cases by hackers. Coinhive generated the script as an alternative to advertisements; a website or app could embed it, and use website visitor's CPU to mine the cryptocurrency while the visitor is consuming the content of the webpage, with the site or app owner getting a percentage of the mined coins.[32] Some websites and apps did this without informing visitors, or in some cases using all possible system resources. As a result, the script was blocked by companies offering ad blocking subscription lists, antivirus services, and antimalware services.[33][31] Coinhive had been previously found hidden in Showtime-owned streaming platforms[34] and Starbucks Wi-Fi hotspots in Argentina.[8][35] Researchers in 2018 found similar malware that mined Monero and sent it to Kim Il-sung University in North Korea.[36]

Ransomware deployed in 2021 by REvil. The hackers are demanding payment in Monero.[37]

Monero is sometimes used by ransomware groups. According to CNBC, in the first half of 2018, Monero was used in 44% of cryptocurrency ransomware attacks.[38]

The perpetrators of the 2017 WannaCry ransomware attack, which was attributed by the US government to North Korean threat actors,[39] attempted to exchange the ransom they collected in Bitcoin to Monero. Ars Technica and Fast Company reported that the exchange was successful,[40][8] but BBC News reported that the service the criminals attempted to use, ShapeShift, denied any such transfer.[41] The Shadow Brokers, who leaked the exploits which were subsequently used in WannaCry but are unlikely to have been involved in the attack, began accepting Monero as payment later in 2017.[40]

In 2021, CNBC, the Financial Times, and Newsweek reported that demand for Monero was increasing following the recovery of a bitcoin ransom paid in the Colonial Pipeline cyber attack.[9][7][42] The May 2021 hack forced the pipeline to pay a $4.4M ransom in bitcoin, though a large portion was recovered by the United States federal government the following month.[42] The group behind the attack, DarkSide, normally requests payment in either bitcoin or Monero, but charge a 10–20% premium for payments made in bitcoin due to its increased traceability risk.[7] Ransomware group REvil removed the option of paying ransom in bitcoin in 2021, demanding only Monero.[7] Ransomware negotiators, groups that help victims pay ransoms, have contacted Monero developers to understand the technology.[7] Despite this, CNBC reported that bitcoin was still the currency of choice demanded in most ransomware attacks, as insurers refuse to pay Monero ransom payments because of traceability concerns.[9]

The attribution of Monero to illicit markets has influenced some exchanges to forgo listing it. This has made it more difficult for users to exchange Monero for fiat currencies or other cryptocurrencies.[9] Exchanges in South Korea and Australia have delisted Monero and other privacy coins due to regulatory pressure.[43]

In 2018, Europol and its director Rob Wainwright wrote that the year would see criminals shift from using bitcoin to using Monero, as well as Ethereum, Dash, and Zcash.[44] Bloomberg and CNN reported that this demand for Monero was because authorities were becoming better at monitoring the Bitcoin blockchain.[45][44]