FTX blocked user for interacting with the transaction anonymizer

What’s new? Cryptocurrency exchange FTX has frozen the account of a user who sent funds to the platform Aztec Network. It uses zk-SNARK technology to increase the privacy of Ethereum transactions. Analyst Colin Wu wrote about this on Twitter. He added that the exchange has identified the network Aztec Connect as a high-risk crypto mixing platform. The use of such services is prohibited by the rules of FTX.

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

zk-SNARK (a zero-knowledge proof) is a cryptographic protocol that can be used to conceal the source, amount, and recipient of a payment. Herewith, it allows proof that the payment has passed and that the correct number of tokens is in the recipient’s account

What else is known about blocking? According to the exchange’s representatives, industry-leading transaction monitoring tools ensure that users do not interact with high-risk addresses. FTX also recommended that users do not use cryptocurrency mixers in the future so as not to jeopardize their accounts.

What is known about Aztec Network? It is a layer 2 (L2) solution on the Ethereum network. The protocol allows for fast, cheap, DeFi-enabled transfers without compromising decentralization or security.

On August 8, the US authorities added the Tornado Cash crypto mixer to the sanctions list. Restrictions mean a complete ban on the use of the service in the United States. According to the Treasury Department, a total of more than $7 billion has been laundered using Tornado Cash since its inception in 2019.

After that, the service faced a sharp decline in deposits. The dYdX exchange, the Oasis.app DeFi platform and the Aave DeFi protocol started blocking users whose addresses are linked to Tornado Cash.

For more details on the experts’ opinions on the dangers of interacting with sanctioned services such as Tornado Cash, see GetBlock Magazine’s article.