Privacy Pool Seeks to Secure Future of Crypto by Excluding Crooks, Keeping Regulators Away
After the cryptocurrency meltdown at the end of 2022, many people have just stopped thinking about or investing in it. But not everyone. Especially criminal money people who secretly launder hundreds of millions of dollars every day.
The next big thing to make headlines after the FTX crypto eruption is another digital mystery they call a crypto mixer, a service that blends the cryptocurrencies of many users together to obfuscate the origins and owners of the funds. Because Bitcoin, Ethereum, and most other public blockchains are transparent, privacy is hard to achieve. Financial privacy is important to those who live under oppressive regimes or who wish to make legal transactions anonymously, such as donating to charities. Also, about 10% of money launderers use them to obscure the connection between the crypto wallets they use to collect their illicit profits and the crypto wallets from which they transfer their funds to crypto-to-fiat exchanges. Then they can avoid triggering anti-money laundering alerts.
Joel Kahlili wrote a detailed article on wired.com that discusses the next phase of cryptocurrency, Tornado Cash, which is a crypto mixer that is no longer legal in the U.S.
Under the sanctions—which have been challenged in court—U.S. residents are no longer legally allowed to use Tornado Cash. Separately, one of the service’s developers, Alexey Pertsev, is being held in custody in the Netherlands on suspected “involvement in concealing criminal financial flows and facilitating money laundering.”
But one of the early architects of the Tornado Cash project, Ameen Soleimani, has announced that he’s launching a successor to the sanctioned mixer, Privacy Pools, which he says will still allow users to make private, largely untraceable transactions while discouraging money laundering and other illegal activities.
“If Americans want privacy, we have to figure out how to operate within the regulatory paradigm,” says Soleimani
This brings us to Soleimani’s latest idea and whether it will be legal to use in the United States.
Privacy Pool will use a cryptography technology called “zero-knowledge proof,” by which users are able to demonstrate that their crypto withdrawals are unconnected to deposits made by known criminal wallets.
The basic premise, Soleimani says, is that users can “withdraw without revealing who they are by publicly proving who they are not.”
And this of course has authorities around the world concerned and paying attention. Hopefully, they will be paying a lot more attention than they did when it came to FTX and its Ponzi scheme. To get even deeper information regarding crypto mixers, read this blog.
read more at wired.com