The privacy-minded cryptocurrency Monero (CRYPTO: XMR) soared on Monday morning. As of 12:45 p.m. ET, it had gained 14.5% in 24 hours. Unfortunately, this sudden jump was the result of some unsavory financial moves apparently involving a large Bitcoin (CRYPTO: BTC) heist.
Monero started a rapid price gain on Sunday night, and market observers were left with more questions than answers at first. The price gain didn’t match up with common catalysts such as a large number of new Monero holders, a meme coin push on social media, or Monero analysis in traditional large-scale media, such as TV channels and newspapers.
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The mystery ended when the well-known crypto security account ZachXBT found some suspicious transactions on the Bitcoin and Monero blockchains. One account transferred 3,520 Bitcoins to another, moving about $330 million of crypto funds.
That move could have been a normal transfer between two very large Bitcoin holders or a single crypto whale simply rearranging Bitcoin balances into a new crypto wallet, but the next step undermined these innocent theories. The funds were immediately transferred again to six different Monero accounts. Nobody knows what happened after that because Monero was designed to hide the identity of each account and transaction.
In other words, it looks like somebody stole 3,520 Bitcoins and used Monero to make the funds impossible to trace after that first contact. This could be money laundering on a massive scale.
There’s a significant downside to funneling this large Bitcoin balance through the Monero channel. It’s normally a lightly traded cryptocurrency. The 24-hour trading volume stopped at $67 million on Saturday, April 26. Pushing $300 million through this lightweight money transfer system will almost certainly result in much higher Monero prices, making the transactions more expensive.
This cash-burning effect also supports the idea that someone was up to no good here. Why accept a 15% surcharge on your privacy-boosting trades? The funds apparently had to move quickly.
I used to like Monero for its top-notch privacy protection features. Things have changed, though. Events like this one, plus Monero’s widespread use in crypto-mining computer virus attacks, have changed my mind over time. What used to look like a user-friendly privacy tool actually seems more useful to bad actors wanting to cover their alleged crypto-stealing tracks. I don’t recommend building an investment portfolio around that type of unsavory value-building thesis.
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