According to reports on social media, some users complained that FTX blocked a transaction that was associated with the Aztec Network’s zkmoney privacy technology. After the allegations, FTX CEO Sam Bankman-Fried clarified that transactions are monitored for AML compliance but that “does not mean that any accounts have been frozen.”
Blockchain Journalist Wu Says FTX User’s Account Was Freezed After User Negotiated With Aztec Network’s Privacy-Enhancing ZK-Rolups
On August 18, the Chinese journalist, Colin Wu ‘Blockchain’, published a tweet, which said that a user who made a deal with Aztec Network. zkmoney tech, had their account frozen. Aztec Network is a privacy and scaling network, and similar to Optimism and Arbitrum it uses ZK rolls, but Aztec Network’s zkmoney technology improves privacy. Aztec’s technology uses a zk-SNARK scheme called “Plonk,” a general-purpose zero-knowledge proof mechanism.
So while Ethereum’s average network fee is 0.0014 ether or $2.29 using today’s ETH exchange rates, sending ether via the Aztec Network will cost only $0.40 per transfer. “Recently, FTX froze a user account that sent coins to [Aztec Network’s] zkmoney,” Wu Blockchain tweeted Thursday. “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.”
The journalist added:
FTX said that industry-leading third-party transaction monitoring tools ensure that users do not interact with high-risk addresses, it is recommended not to use the mixing service in the future, otherwise, it may endanger the FTX account.
FTX CEO Sam Bankman-Fried responds, Aztec network insists ‘Privacy is legitimate’
Following the tweet, FTX CEO Sam Bankman-Fried replied to Wu Blockchain’s statement and clarified that while FTX monitors transactions, it does not mean the exchange has frozen any accounts. “To be clear – this is getting messy,” Bankman-Fried said. “We constantly monitor transactions for AML compliance, and do enhanced due diligence on certain transactions, but that does not mean any accounts have been frozen.” Additionally, the official Aztec Network Twitter page tweeted about the matter.
“We are aware of reports that FTX is warning users not to interact with Aztec,” the team said. “As a result, we want to underline our current and ongoing risk-reduction framework: 1) Implement practical deterrents 2) Measure their effectiveness – Privacy is legitimate.” Aztec Network continued:
We want to start by reiterating our mission — Empowering individuals with on-chain privacy. Our belief is that privacy is a fundamental precursor to — Discretion, Security, [and] Creativity — In other words, normality. As a result, our approach has always been one of practical deterrence: Ensuring that users have access to on-chain privacy while preventing money laundering and illegal activity.
The news from the Aztec Network follows the ongoing complaints about Tornado Cash being banned by the US government. In addition, reports show that the decentralized exchange (dex) platform Uniswap has blocked 253 Ethereum-based addresses from the frontend using technology from TRM Labs. Furthermore, 12 days ago, the developer Banteg reported that Center Consortium blacklisted 75,000 USDC linked to the Tornado Cash pool.
What do you think about the reports that claim that FTX has frozen an account of someone who used the Aztec Network? Let us know what you think about this topic in the comments section below.
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