ETH-3.31%
Crypto
Aztec Protocol Flagged by FTX After CEO Criticizes Tornado Cash Sanctions
Cryptocurrency exchange FTX flagged Aztec and froze some of the accounts that interacted with the privacy-focused protocol.
Editorial disclosureRead more
All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist.com. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.
Crypto exchange FTX flagged the Aztec protocol and its services, citing “high risk”, according to tweets and screenshots by numerous FTX users. FTX’s action comes after Aztec CEO Zac Williamson spoke against the recent sanctions imposed on the crypto mixer Tornado Cash, arguing “there is a short window where heavy-handed regulation could strangle the innovation required to get us there.”
FTX Freezes Accounts that Interacted With Aztec
Bahamian cryptocurrency exchange FTX flagged the privacy-focused protocol for Ethereum, Aztec, due to high-risk activities involved with the tool. The company is reportedly blocking users from making transactions with funds that interacted with Aztec services including Aztec Connect, Aztec Network, and zk.money, according to screenshots and tweets provided by FTX users.
One of the users said his account on FTX was frozen because he interacted with Aztec. Furthermore, the FTX allegedly asked some of its users to provide information regarding the origin of their funds and the purpose of their trades.
The move by FTX comes more than a week after the U.S. Treasury imposed sanctions on the crypto tumbler Tornado Cash and 45 Ethereum wallet addresses related to the service, due to money laundering allegations. The Treasury claims Tornado Cash has been used to launder more than $7 billion worth of digital currencies since its launch.
Zac Williamson, Chief Executive Officer of Aztec, posted a multi-thread tweet where he slammed the sanctions against Tornado Cash. Williamson thinks a more effective way for the U.S. regulators was “to require off-ramps to use the TornadoCash compliance tool instead of a blanket ban.”
“The depressing thing is that we’ve been through this already with the World Wide Web. We don’t arrest internet service providers for the data in their cables. We don’t arrest DNS providers for signing illegal traffic.”
– Zac Williamson
Join our Telegram group and never miss a breaking digital asset story.
Crypto Community Slams FTX For Flagging Aztec
FTX’s decision to flag Aztec was not welcomed by the crypto community, with some of them arguing a need for privacy shouldn’t be criminalized. However, others believe the move underscores FTX’s worries about its exposure to high-risk crypto addresses.
Crypto services like mixers and cross-chain bridges have been facing increased scrutiny lately due to a sharp jump in illegal money activities this year. A recent survey by a blockchain analytics firm showed that cross-chain bridge RenBridge has been used to launder $540 million of dirty cash.
The number of attacks on decentralized finance (DeFi) protocols soared by a whopping 1330% last year, research shows. One of the biggest crypto heists of the year was the Ronin hack, where over $600 million was exploited.
Do you support FTX’s decision to flag the Aztec protocol? Let us know in the comments below.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
