Not as Effective as Claimed
Much of the Monero community doubts that the tool is as effective as CipherTrace claims.

Monero researcher Sarang Noether told Crypto Briefing that, in his opinion, CipherTrace has not provided “substantial details” that prove the effectiveness or scope of the tool:

“Without such details or evidence, it is not possible to assess what the tool does, or how well it does it. As a mathematician and cryptographer, I prefer to base my technical conclusions on data, not on press releases or unsubstantiated claims.”

Ultimately, it does not appear that CipherTrace is capable of deriving user identities from basic wallet addresses and transaction data—certainly not to the same extent that it can identify Bitcoin users.

Instead, it seems that CipherTrace’s tool depends greatly on off-chain data from exchanges and other sources. Users who keep their personal data separate from their Monero address can expect reasonable privacy.

That said, governments and regulators are free to use the tool and reach their own conclusions. CipherTrace says that the tool has already been used in several investigations.