Vitalik Buterin presented an alternative to Tornado Cash
Date: 2023-09-07 Author: Karina Ziganova Categories: BUSINESS, IN WORLD
Ethereum (ETH) blockchain co-founder Vitalik Buterin co-authored a research paper on a new privacy protocol dubbed “Privacy Pools” with several experts.
The authors of the document - Buterin, developer Amin Suleimani, Jacob Illum from Chainalysis, and scientists Mattias Nadler and Fabian Shar - proposed a service that is positioned as the successor to the Tornado Cash cryptocurrency mixer. This service focuses on privacy, which has recently come under scrutiny from regulators.
How "Privacy Pools" work
The essence of "Privacy Pools" is to establish a "divisive balance" - a term coined by the authors to describe a system that filters out illegal funds while maintaining compliance with regulatory standards.
Moreover, it allows for private and legal financial transactions. In other words, the new development allows you to prove the legitimacy of assets without disclosing the entire history of your financial transactions.
According to the authors of the development, the combination of privacy and regulation can be beneficial for the long-term sustainability of cryptocurrencies. In the event that these pools perform well, they can provide a framework for financial privacy that is also compliant.
What is known about Tornado Cash
Tornado Cash is a decentralized cryptocurrency mixer. It offers a service that mixes cryptocurrencies, thus hiding the origin of the assets. However, while Tornado Cash was useful for privacy-focused transactions, it got into a legal scandal over transactions linked to the North Korean hacker group Lazarus.
In August 2022, Tornado Cash was blacklisted by the US Department of the Treasury's Office of Foreign Assets Control (OFAC). In addition, the regulator claims that the cryptomixer turned out to be a key tool that was used by attackers to launder crypto funds stolen from decentralized exchanges and games like Axie Infinity.
Members of the crypto community have repeatedly asked the US authorities to ease sanctions against Tornado Cash. However, in August the court rejected the application.
