Monero (XMR) rallied close to 50% of its value, reaching a peak of $316 and adding $1 billion in market value overnight, as a result of, according to the ‘people’s blockchain investigator’ ZachXBT, a hacker sent coins to Monero, post-exploitation. Monero has recently recovered, after being delisted from major exchanges, as part of a campaign against privacy tokens, only to rise over the past 12 months with expectations of further deregulation. Monero has suffered from horizontal trading and has even dipped to $120. The recent pump of XMR seems unnatural at first glance, and if ZachXBT is right about a hacker being responsible for the spike, the pump could be a short-term occurrence.
ZachXBT noticed some strange activity while analysing blockchain activity, noticing a suspicious transaction of 3520 Bitcoin being transferred from a possible victim’s wallet to a known attacker’s address. The Bitcoin tokens were worth around $330.7 million. Traders were meanwhile celebrating the rise in Monero’s price, which seemed like a positive sign for the privacy token. ZachXBT noticed that the attacker distributed the tokens across 6 other addresses, a common tactic used by hackers to disguise the transactions. And then a massive amount of the coins were swapped from Bitcoin to Monero. Many hackers like to use tokens like Monero because they allow them to hide their stolen coins. With the sudden demand for XMR tokens, the price jumped by around 50%
Monero traders were anticipating an increase in value because of the upcoming EP159 and EP160 upgrades. However, when the pump hit the token, many short positions were liquidated as the price shot up by an unexpected amount. The Monero upgrades aim to make the token more compliant by allowing transactions to be validated while retaining the anonymity of the users. Such a strategy is being considered by other major cryptocurrencies. The compliance upgrade would allow Monero to be listed on major exchanges like Coinbase and Binance. The value created by this upgrade could have further helped the price pump while the extra demand spike occurred. Other privacy tokens, such as Zcash and Dash, also experienced price increases, suggesting there is more to the story.
Monero is not an infallible privacy token for criminals. Jack Edward Finney, for example, a British dark web drug dealer, had his Monero tokens seized, not because the XMR protocol was breached, but rather because he was convicted and compelled to give up his tokens. Despite many privacy tokens offering advanced cryptographic privacy enhancements, criminals are often caught using old-fashioned detective work. Meanwhile, the privacy tokens offer advanced security features for regular users to protect their money and stop third parties from tracking their metadata.
Criminals, however, when it comes to cryptocurrency use, still prefer mainstream tokens like Bitcoin and Ethereum. There are many third-party protocols they can use to mix their tokens, without any need for advanced privacy-focused cryptocurrencies. And this isn’t even starting on the fact that fiat currencies are still mainly used for crime. The reason why some criminals prefer mainstream tokens is that they offer the same services that make privacy tokens attractive, such as cross-border transactions and secure online storage. Further, Monero has a big disadvantage for criminals, having low liquidity, as shown by the recent XMR pump, caused by many exchanges banning the crypto.
