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
  • 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

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

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.

recent research

Unlocked by Template.png

Research

The march toward an interoperable and onchain-by-default internet depends on reliable messaging and value transfer across heterogeneous domains. Crosschain protocols now process >$1.3T in combined annual transfer volume and secure tens of millions of user interactions, yet no single design dominates.

article-image

The goal, per Santiago Santos, is to make crypto a relatable piece of tech for people who may not even understand it

article-image

Stripe stablecoin unit aims to operate under a federal charter enabling regulated stablecoin issuance and custody services

by Blockworks /
article-image

Will TradFi make crypto better or create more problems than it solves?

article-image

Subtle decisions by risk curators saved Aave from significant turmoil

article-image

The new Rootstock Institutional unit aims to connect professional investors to Bitcoin-native yield and liquidity strategies anchored in BTC’s security layer

by Blockworks /
article-image

DOJ files record civil forfeiture against more than 127,000 BTC linked to scam activity

by Blockworks /