Tornado Cash 2.0: Privacy Pools Claim to Keep the Money Launders at Bay

The early contributor of Tornado Cash built a new crypto mixer called Privacy Pools that addresses the regulators’ concerns.

Ameen Soleimani, one of the early contributors to Tornado Cash, claims to have fixed the flaws of the crypto mixer with Privacy Pools. The new mixer uses Zero-Knowledge (ZK) Proof, through which users can explain that their withdrawals are not part of the illicit transactions.

The Decentralized Autonomous Organization (DAO), MolochDAO, supported the developers in building Privacy Pools, taking inspiration from Vitalik Buterin’s idea. The Ethereum co-founder also suggested Stealth Wallets, which could offer privacy on Ethereum.

The Privacy Pools Demo

Soleimani wants to normalize the privacy of blockchain users. He told Wired, “My goal is to have a privacy tool that I can use, as an American citizen. This has always been my goal—it was the goal when we made Tornado Cash in the first place. My friends and I think privacy is normal. Someday you will too.”

The demo version of Privacy Pools is live, and Soleimani shared a tutorial video explaining the mixer.

But, he warns, “It’s not a ‘put all your money in’ kind of launch.” It is an experimental code that has not been audited. Furthermore, the team is also trying to solve some bugs.

Regulatory Challenges

With Privacy Pool’s demo launch, the developer wishes to start a conversation “to help regulators understand a potentially more attractive equilibrium between privacy and regulation that we didn’t even know existed a few months ago.”

When Wired asked whether the US regulators would be receptive to the idea, he said he was not confident. He shares that the feeling is mutual amongst the crypto circles.

The regulators sanctioned Tornado Cash for facilitating money laundering from cybercrime without proper risk management and anti-money laundering controls. Notably, the Axie Infinity Hackers used Tornado Cash to funnel funds away. Later, the Dutch authorities arrested the developer Alex Pertsev.

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