According to reports on social media, a number of users have complained that FTX blocked a transaction associated with Aztec Network’s zkmoney privacy technology. Following the accusations, FTX CEO Sam Bankman-Fried explained that transactions are being monitored for AML compliance, but that “doesn’t mean no accounts have been frozen.”
Reporter Wu Blockchain Says An FTX User’s Account Was Frozen After The User Completed A Transaction With Aztec Network’s Privacy-Enhancing ZK-Rollups
On August 18, China-based journalist Colin Wu “Blockchain” tweeted that a user who transacted with Aztec Network’s zkmoney technology had his account frozen. Aztec Network is a privacy and scaling network, and similar to Optimism and Arbitrum, it uses ZK rollups, 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 the average Ethereum network fee is 0.0014 ether or $2.29 using current ETH exchange rates, sending ether through the Aztec network will only cost $0.40 per transfer. “Recently, FTX froze a user account that was sending 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 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 Legit”
Following the tweet, FTX CEO Sam Bankman-Fried replied to Wu Blockchain’s statement and explained that although FTX monitors transactions, it does not mean that the exchange has frozen accounts. “To be clear, it’s getting scrambled,” Bankman-Fried said. “We are continuously monitoring transactions for AML compliance and performing enhanced due diligence on certain transactions, but that does not mean any accounts have been frozen.” Additionally, the official Aztec Network Twitter page tweeted On the question.
“We are aware of reports that FTX is warning users not to interact with Aztec,” the team said. said. “As a result, we want to highlight our current and ongoing harm reduction framework: 1) Implementing practical deterrents 2) Measuring their effectiveness – Confidentiality is legitimate.” Aztec network continued:
We want to start by reiterating our mission – Empowering Individuals with On-Chain Privacy. Our belief is that confidentiality is a fundamental precursor to – Discretion, Security, [and] Creativity – In other words, normalcy. As a result, our approach has always been one of practical deterrence: ensuring users have access to on-chain privacy while deterring money laundering and illicit activity.
The Aztec Network news follows ongoing complaints about the US government’s ban on Tornado Cash. Additionally, reports show that decentralized exchange (dex) platform Uniswap blocked 253 Ethereum-based addresses from the frontend using TRM Labs technology. Also, 12 days ago software developer Banteg reported that Center Consortium blacklisted 75,000 USDC related to the Tornado Cash pool.
What do you think of the reports that allege that FTX froze 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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