A former developer of Tornado Cash, a cryptocurrency mixer that obscures the tracking of digital assets, is developing a new platform that aims to address the service’s association with illegal activities. Ameen Soleimani has launched his new Ethereum mixer, called Privacy Pools, on GitHub, and hopes that it will encourage US regulators to reconsider their negative view of privacy mixers. In a series of tweets, Soleimani pointed out what he sees as a major drawback of Tornado Cash: that legitimate users have no means of separating themselves from criminal organizations.
Privacy Pools intends to tackle this issue by enabling depositors and withdrawers to exclude themselves from a group of anonymous entities that contain an address linked to illicitly obtained or laundered assets. The platform achieves this through the use of zero-knowledge (ZK) proofs, which guarantee the user’s continued privacy.
“Users have the option to help regulators isolate illicit funds, without revealing their entire transaction history. With privacy pools, just because someone deposits into the same smart contract as you, it doesn’t mean they can also force you into sharing an anonymity set with them. It’s your choice.”
Despite the availability of a demonstration version, the developer notes that the protocol is still in an “experimental” phase since it has not undergone an audit. However, the developer believes that the platform is almost prepared to be launched.
According to Soleimani, the goal of Privacy Pools is to provide strength to the cryptocurrency industry;
“to defend against hackers abusing the anonymity sets of honest users without requiring blanket regulation or sacrificing on crypto ideals.”
He expressed his desire for companies that analyze blockchain, such as Chainalysis and TRM Labs, to track the origin of deposits. By doing so, users of the tool can avoid the need to manually create their own exclusion lists.
Soleimani’s ultimate objective is to initiate a dialogue with regulators in the United States on the advantages of on-chain privacy tools and how they can operate independently from unlawful activities with the help of ZK proofs.
Last year in August, the US Office of Foreign Asset Control (OFAC) imposed sanctions on ETH and USDC addresses related to Tornado Cash due to a string of hacks allegedly carried out by North Korea’s Lazarus Group. Officials suspect that the group used the mixer to conceal the illicit funds and remain anonymous.
Shortly after the incident, the authorities arrested Alexey Pertsev, the creator of Tornado Cash, in the Netherlands on multiple charges of money laundering. He is currently in custody and is scheduled to appear in court again in April.
