On Thursday, crypto trading platform FTX reportedly began freezing accounts of users who have sent coins via zk.money, a layer-2 privacy app built by Aztec Network on top of Ethereum.
Chinese crypto reported Colin Wu confirmed the reports earlier today. Wo said that FTX had identified ZkMoney as a high-risk mixing service and intended to discourage its users from engaging with the platform.
Aztec CEO Zac Williamson has acknowledged the situation on Twitter, saying that it is working on several implementations to slow the rate of deposits and make it easier to identify addresses engaging in money laundering.
“In the coming days and weeks, we will expand our efforts to include: System-wide daily asset deposit caps, IP-specific deposit rate-limiting, Single-address pending deposit caps and Constraints on the escape hatch window,”
said the company.
The development comes at the back of the controversial ban of crypto mixer Tornado Cash. Last week, the U.S. Treasury Department blacklisted the protocol for allegedly enabling billions worth of hacking operations by providing money laundering services.
Williamson then had criticized the move over a Twitter thread, saying, “treating open-source cryptographic software as a sanctioned entity is a dark step backwards that reminds me of the 1990s.”
There weren’t any official confirmations from FTX, but the company’s CEO Sam Bankman-Fried has responded to the outrage on social media by suggesting that the news of the account freezes has been “garbled.”
Meanwhile, Aztec remains firm on its stand to discourage illicit use without sacrificing user privacy. “If our network is used to harm users, we’ve failed our mission,” it tweeted.