FTX Flags More Privacy Tools After Tornado Cash Sanctions

The exchange reportedly described using privacy tool Aztec as a high-risk activity

article-image

Blockworks Exclusive Art by Axel Rangel

share

key takeaways

  • FTX warned users against interacting with Aztec addresses, screenshots on Twitter showed
  • The move comes after mixing service Tornado Cash was sanctioned over money laundering allegations

FTX appears to be blocking users from sending funds that interacted with privacy-focused Aztec protocol.

The crypto exchange warned users against using “high-risk” services Aztec Connect, Aztec Network and zk.money, according to screenshots and tweets posted by multiple FTX users. 

One user said access to his FTX account was frozen for transactions made to and from the service. Another suggested interacting with customer service privately to avoid related issues. The crypto exchange also appeared to ask some users the origin of their funds and the purpose of the transaction via email, one screenshot showed.

Aztec’s zk.money protocol, launched in March 2021, can be used to send and receive funds privately for direct Ethereum transactions. It uses a shield model similar to a virtual private network, allowing users to privately connect to Ethereum’s decentralized finance (DeFi) ecosystem, including Uniswap and Aave.

The move, first spotted by Chinese journalist Colin Wu, highlights FTX’s concerns about its exposure to risky addresses.

The crypto community reacted negatively to FTX’s restriction, with some pointing out that a desire for privacy shouldn’t be criminalized. Others noted a chunk of wallets could get blocked for simply having indirectly interacted with private layer-2s such as Aztec. 

Loading Tweet..

Neither FTX nor Aztec immediately confirmed the restricted access when contacted by Blockworks.

FTX’s compliance concerns come after the US Treasury sanctioned mixing service Tornado Cash, along with other 45 related Ethereum wallet addresses, for alleged virtual currency laundering for criminals.

Mixers have come under increasing scrutiny after an uptick in illicit money moving through such services in 2022. They are designed to conceal the identity of holders and the origins of currency by pooling together multiple transactions.

Other platforms following the same approach as Tornado Cash are likely to receive the same scrutiny, leading to additional measures for increased transparency, according to Tammy Da Costa, analyst at DailyFX.

“For virtual currency, the sanctions against these services have highlighted the shift in regulations that aim to monitor transactions made through a blockchain,” Da Costa told Blockworks in an email.

Zac Williamson, CEO of Aztec, criticized sanctions against Tornado Cash on Twitter, saying “there is a short window where heavy-handed regulation could strangle the innovation required to get us there.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates (1).jpg

Research

Jupiter has emerged as the undisputed liquidity backbone of Solana, commanding over 90% of spot DEX aggregation and 80% of perp trading volume. But behind the numbers lies a far more ambitious play: a cross-chain, vertically integrated super-app spanning swaps, synthetics, NFTs, memecoins, and launchpads. This report explores Jupiter’s rapid rise, the monetization upgrades reshaping its revenue profile, and the risks that could unwind its dominance, from token dilution to competition. With annualized revenues nearing $300M, the upside is undeniable, if it can navigate the turbulence.

article-image

Immutable has been building a game with Ubisoft that was slated to unveil in April. It may be a TCG.

article-image

Curve founder Michael Egorov is working on a new protocol designed to eliminate impermanent loss, rethink token emissions, and capture BTC-native yield

article-image

Mining outfits have gone bust in the wake of prior halvings. Not so this time around.

article-image

Zora’s announcement that its token is for “fun only” sparked a debate about the need for such tokens

article-image

In recent weeks, Helium has hit new all-time highs while passing major protocol milestones

article-image

Financial advisers in a January survey said equity ETFs were their top choice for gaining crypto exposure in 2025