Ethereum co-founder Vitalik Buterin exploring opportunities in “Privacy Pools”
Vitalik Buterin, Ethereum co-founder, along with his team is working on an alternative of blacklisted Tornado Cash mixer. The team is developing product which will be compliant with industry regulations.
A recent announcement from the Buterin Team member reads: “We explored new compliance opportunities where users can provably dissociate from illicit funds.”
Other than Buterin, the rest of the team comprises Ameen Soleimani – a developer, Jacob Illum – a Chainalysis researcher, Matthias Nadler and Fabian Schar are scholars.
Touted as “a novel smart contract-based privacy-enhancing protocol” Privacy Pools will do the same job as Tornado Cash, to enhance transactional privacy on blockchains, only better.
Specifically, while they will not reveal the complete transaction history, Privacy Pools will be able to determine the source of the funds using zero-knowledge proofs. This means they will be able to tell whether the funds come from illicit sources.
Using Tornado Cash as a reference point, the team explain that it is possible for financial privacy and regulation to co-exist as long as you can prevent it from being misused by unlawful actors.
It may be recalled that Tornado Cash, the Ethereum-based non-custodial privacy mixer was blacklisted recently after the Department of the Treasury’s Office in collaboration with the US Department of Justice (DOJ) and the IRS accused its developers Roman Storm and Roman Semenov of laundering over $1 billion for the infamous Lazarus Group.
Buterin and his team is collaborating for a replacement touted as being “regulation-friendly.”
The Ethereum co-funder attempting to distance his network from possible negative sentiment connected with Tornado Cash even as the justice department turns its gaze toward mixing services and how they play enabling roles for criminals looking to conceal their activities after stealing funds from unsuspecting victims.
As per the privacy paper presented by Buterin team, the “Privacy Pool” – a novel smart contract-based privacy-enhancing protocoal – could be employed to separate between good and bad actors. The core idea is to allow users to publish zero-knowledge proof, demonstrating that their funds originate from known – lawful sources.
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