FTX blocks user for interacting with a transaction-privacy service

The FTX exchange blocked the account of a user who sent funds to the Aztec Network platform, which uses zkSNARKs technology to enhance the privacy of Ethereum transactions. This was reported by journalist Colin Wu.

Recently, FTX froze a user account who sent coins to @aztecnetwork ‘s zkmoney. According to FTX, Aztec Connect — Aztec network / zk money has been identified as a mixing service, which is a high-risk activity prohibited by FTX.

— Wu Blockchain (@WuBlockchain) August 19, 2022

According to Wu, FTX identified the Aztec Connect network as a high-risk mixing service, the use of which is prohibited by the platform’s trading rules.

FTX said that leading industry third-party tools for transaction monitoring guarantee that users do not interact with high-risk addresses.

The exchange urged clients not to use cryptocurrency mixers in the future, so as not to put their accounts at risk, Wu added.

In 2020, the London-based startup Aztec presented the second version of the platform based on a second‑layer scaling solution ZK-Rollups. The use of zero-knowledge proofs zkSNARKs enables aggregating transactions, increasing throughput to 300 TPS.

Similarly, zkSNARKs also make transactions private, concealing the sender, recipient and amount.

In August, the U.S. Treasury imposed sanctions against the popular Ethereum mixer Tornado Cash. Authorities accused the service of facilitating the laundering of more than $7 billion in cryptocurrency, including funds belonging to North Korean hackers.

This sparked a wave of tighter compliance measures across the industry. Circle blacklisted 38 Tornado Cash wallets’ USDC addresses. Blocking of accounts of users who had previously interacted with the mixing service began on the DEX dYdX and the DeFi platform Oasis.

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