Popular privacy-focused network Aztec protocol finally reacted to reports that the global cryptocurrency exchange FTX has been freezing user accounts interacting with the protocol.
Aztec highlighted their present risk-reduction framework which involves “implementing practical deterrents” and “measuring their effectiveness.”
The privacy-focused protocol will from now on ensure users have access to privacy on-chain while deterring money-laundering and illicit activity.
In the near future, Aztec is aiming to broaden its efforts in system-wide daily asset deposit caps, IP-specific deposit rate-limiting, single-address pending deposit caps, and constraints on the escape hatch window.
These initiatives will slow the rate of deposits and withdrawals, make it easier to identify at-risk addresses, and prevent illicit users from sidestepping Falafel, the open-source implementation of Aztec’s rollup.
Aztec believes that these approaches will effectively restrict criminal actors’ capability to move stolen assets through Aztec while retaining customers’ ability to interact with authorized Ethereum services.
“To would-be illicit users of our network, we want to send a clear message. We will not be passive in stopping illicit behavior,” the protocol noted.
Aztec intends to continue discussions with global regulators, centralized exchange organizations, and customers. The protocol and its partners have contacted FTX to learn more about the exchange’s perspectives.
The Aztec protocol stated that they will include further details and analysis regarding this situation in a blog post soon.
The reports of FTX freezing user accounts interacting with Aztec protocol did come to the attention of FTX CEO Sam Bankman-Fried and he responded on Twitter by saying that “To be clear–this is getting garbled. We are constantly monitoring transactions for AML compliance, and do enhanced due diligence on certain transactions, but that does not mean that any accounts were frozen.”
All these events are happening as a chain reaction to the U.S. OFAC sanctioning Tornado Cash, a popular virtual currency mixer. Since then firms are actively trying to avoid connections with privacy-focused tools.