FTX froze user account for sending coins to privacy roll up

[bbc.reporter]

It appears FTX is beginning to protect itself from being sanctioned if they allow deposits and withdrawals to any privacy enhancing networks or services. According to Wu Blockchain, FTX identified this privacy roll up for Ethereum called Aztec Network as a mixing service.

This might also only be the beginning. I predict within 10 years, we will have a world where much of the exchanges would begin blocking you if you use privacy enhancing services, networks and protocols.



Recently, FTX froze a user account who sent coins to @aztecnetwork's zkmoney. According to FTX, Aztec Connect - Aztec network / zk money has been identified as a mixing service, which is a high-risk activity prohibited by FTX.

Source https://mobile.twitter.com/WuBlockchain/status/1560417501053616131

[1715160744]

1715160744

[1715160744]

1715160744

[1715160744]

1715160744

[1715160744]

1715160744

[1715160744]

1715160744

[Charles-Tim]

Recently, FTX froze a user account who sent coins to @aztecnetwork's zkmoney. According to FTX, Aztec Connect - Aztec network / zk money has been identified as a mixing service, which is a high-risk activity prohibited by FTX.

If Aztec Network seem more to be like a mixing service, people using it should expect that their exchange account can be frozen if a mixed coin is sent to or received from the mixing service. People that are using exchanges should always know that they do not have privacy on exchanges and also that they do not have full control over their own coins and tokens. To have full control, noncustodial wallets are the only option.

[cabron]

FTX replied to the tweet.

We are aware of reports that FTX is warning users not to interact with Aztec.

As a result, we want to underscore our current and ongoing risk-reduction framework:

1) Implement practical deterrents
2) Measure their effectiveness

Privacy is legitimate:

https://mobile.twitter.com/aztecnetwork/status/1560710567249096704

Of course they are discouraging the use of mixers/privacy networks according to the thread is about deterring money-laundering and illicit activity. This is the end of privacy.

It must be a huge amount that they notice the user and they would question why would he need to use mixer or privacy networks?
A kind of an interrogation and I guess they'd will be tracing the funds. How many hops does Aztec do?

[LeGaulois]

If the majority of people use a mixing method (whatever it is service, network, or protocol), according to their standard they will block each account. That won't happen.
With all the profits to make, from a company's point of view, they will suddenly find a way.

FTX's CEO is an entrepreneur, and so here to make money. All the stuff about privacy is an "I don't care" thing

@bbc.reporter

If you predict 10 years to see such a situation generalized, I give it 5 years at max. All the companies like FTX want to be compliant and are ready to do anything needed. Blocking a couple of users here and there won't be a big loose as long it makes governments happy.
Remember the case with Binance a couple of months ago?

I say it, CEXs are a threat to the Bitcoin principles. And guess why they don't really want to add LN?

[PX-Z]

These are the things that every exchange users need to do. Avoid using any privacy masking service this also include gambling websites where authorities believe money laundering are used too.

I just don't know if gambling websites detect money from mixers as bad money, but considering they are something like worst in KYC suspending account is highly possible once detected.

[DaveF]

Does anyone have a link to what FTX said from FTX, not from a 3rd party? I poked around their site and their twitter feed but might have missed it.
Not saying what was said is not true, but there have been a lot of people saying that "X" said "Y" and we all find out later it was "Z"

And as always, not your keys not your coins....

-Dave

[bbc.reporter]

FTX replied to the tweet.

We are aware of reports that FTX is warning users not to interact with Aztec.

As a result, we want to underscore our current and ongoing risk-reduction framework:

1) Implement practical deterrents
2) Measure their effectiveness

Privacy is legitimate:

https://mobile.twitter.com/aztecnetwork/status/1560710567249096704

Of course they are discouraging the use of mixers/privacy networks according to the thread is about deterring money-laundering and illicit activity. This is the end of privacy.

It must be a huge amount that they notice the user and they would question why would he need to use mixer or privacy networks?
A kind of an interrogation and I guess they'd will be tracing the funds. How many hops does Aztec do?

It is not a problem if FTX begins warning their users and to discourage them from using mixers, anonymous coins or privacy rollups. It is they're right as a business. However, if they're argument against mixers, anonymous coins and privacy rollups is many criminals use it, have they also considered that also many people who are not criminals use them also? Should we also ban everything the criminals use like cars and cellular phones?

[DaveF]

I don't see the reply from FTX which is why I asked. All I see is stuff from Aztec and a bunch of replies from other people nothing from FTX.
They could have deleted their tweet or posted the reply someplace else. I still can't find them commenting on it at all.

Either way probably does not matter. FTX + FTX US + FTX Turkey have a volume close to what Coinbase does. VS a crap DeFi token. I don't think they care if they loose all the Aztec users.

-Dave

[dkbit98]

I never before heard about Aztec platform but freezing of accounts is spreading like a plague for bunch of different reasons and big centralized exchanges are most responsible for this.
It's funny to see even many members of ethereum community are actually supporting censorship on their blockchain, it shows what a shitshow that blockchain is.
I didn't see official confirmation and explanation from FTX, but I wouldn't be surprised if they start to kiss regulator asses like this as we know they are based in US, and they care only about profit.

I don't see the reply from FTX which is why I asked. All I see is stuff from Aztec and a bunch of replies from other people nothing from FTX.

Check out twitter account of FTX CEO Sam Bankman-Fried, who basically denied freezing any accounts:

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.

https://nitter.foss.wtf/SBF_FTX/status/1560721008956690432

btw I don't trust this guy at all...he looks so sleazy.  

[Darker45]

This might only get out of hand. A user that has an account in FTX could have his/her account easily frozen if somebody crazy will troll or simply annoy or get back at him/her for whatever reason by sending him/her funds from privacy enhancing services.

I remembered in the aftermath of OFAC's ban on Tornado Cash, small amounts of funds coming from the mixing platform were randomly sent to influential people. As a result, those platforms adhering to the order froze accounts which are otherwise innocent. Justin Sun himself was banned from Aave because he was one of those who received.

There are forms of resistance. It seems things would get rather messy from here.

[cabron]

This might only get out of hand. A user that has an account in FTX could have his/her account easily frozen if somebody crazy will troll or simply annoy or get back at him/her for whatever reason by sending him/her funds from privacy enhancing services.

I remembered in the aftermath of OFAC's ban on Tornado Cash, small amounts of funds coming from the mixing platform were randomly sent to influential people. As a result, those platforms adhering to the order froze accounts which are otherwise innocent. Justin Sun himself was banned from Aave because he was one of those who received.

There are forms of resistance. It seems things would get rather messy from here.

Its what might happen.  Anyone with bad intention he could just send dust a known wallet and then the owner of that wallet is done. He'll have a limited platform to go to. Its bad for all.

Oleary also said  that Tornado cash is just the beginning to finally put an end and control and regulate crypto market.  Even if we see more and more Tornado cash alike services, they may just keep freezing accounts til  crypto CEOs negotiates.

[bbc.reporter]

I never before heard about Aztec platform but freezing of accounts is spreading like a plague for bunch of different reasons and big centralized exchanges are most responsible for this.
It's funny to see even many members of ethereum community are actually supporting censorship on their blockchain, it shows what a shitshow that blockchain is.
I didn't see official confirmation and explanation from FTX, but I wouldn't be surprised if they start to kiss regulator asses like this as we know they are based in US, and they care only about profit.

I also used to criticize exchanges, however, they do not have a choice, I reckon. They are required to stay compliant with regulations or they will have their business license and other licenses for operation to be removed. They will also be having the risk of lawsuits.

Jesse Powell, the CEO of Kraken has always been in support of privacy for the community, however, if he is given the choice of keeping Kraken in operation or go against a lawsuit, I am quite sure he will choose Kraken.

[Darker45]

This might only get out of hand. A user that has an account in FTX could have his/her account easily frozen if somebody crazy will troll or simply annoy or get back at him/her for whatever reason by sending him/her funds from privacy enhancing services.

I remembered in the aftermath of OFAC's ban on Tornado Cash, small amounts of funds coming from the mixing platform were randomly sent to influential people. As a result, those platforms adhering to the order froze accounts which are otherwise innocent. Justin Sun himself was banned from Aave because he was one of those who received.

There are forms of resistance. It seems things would get rather messy from here.

Its what might happen.  Anyone with bad intention he could just send dust a known wallet and then the owner of that wallet is done. He'll have a limited platform to go to. Its bad for all.

Oleary also said  that Tornado cash is just the beginning to finally put an end and control and regulate crypto market.  Even if we see more and more Tornado cash alike services, they may just keep freezing accounts til  crypto CEOs negotiates.

Let's set aside for the meantime that O'Leary is a d*ickhead, what happens if crypto services are offered by non-traditional systems where there are no headquarters, no CEOs, no owners? What happens if Bitcoin becomes the currency of choice and OFAC will be helpless in the face of its adoption? There's no founder or CEO to negotiate with. There's no server to shut down. Addresses could be banned, yes, but it is very easy to generate a new one. How will they proceed?

This isn't the beginning of control simply because state authorities cannot impose total control. If at all, this is the beginning of supporters starting to get enlightened and eventually leaving centralized platforms such as FTX because it is obviously a censorship point. As I've said, things are going to get messy. The more stern state regulators become the more difficult the situation they're bringing themselves into grows.

[hugeblack]

It is easy for governments to put pressure on the platforms to force them to put additional conditions on users, something that will be more stringent in the coming years so that the conditions of these platforms will be more stringent than the banks themselves.

But the problem, in my opinion, lies in the abuse of these authorities by the platforms themselves, as many platforms can request impossible conditions from the user in exchange for allowing him to withdraw his money.

Personally, I blame the users and developers as the user puts all his money to these centralized platforms and developers as most of the decentralized platforms are centralized at some point.

[DaveF]

There really are enough DEX out there for people to use, if they choose not to use them, then that is on them.

Also, lets face it at least in this case it always looked like someone just talking BS. They sent coins out and their account was frozen. That is just not logical. I can see where they may freeze your account if incoming coins originated from someplace that they have on their 'no' list but going out. You could have just as easily sent them to your wallet 1st and then on. 1 quick extra step. It really does not even pay to monitor outgoing for things like that. Otherwise they will be following coins forever.

-Dave

[dkbit98]

I also used to criticize exchanges, however, they do not have a choice, I reckon. They are required to stay compliant with regulations or they will have their business license and other licenses for operation to be removed. They will also be having the risk of lawsuits.

Nobody forced them to create and own centralized exchanges, and they can move it to some other countries or work on becoming decentralized.
With that attitude nobody would ever create anything useful for people (Bitcoin for example), if only blindly following new draconian rules and regulations.

Jesse Powell, the CEO of Kraken has always been in support of privacy for the community, however, if he is given the choice of keeping Kraken in operation or go against a lawsuit, I am quite sure he will choose Kraken.

Support for privacy is shown if you stand up and choose to fight for what is right, but I guess real problem is that not enough people care about privacy.

There really are enough DEX out there for people to use, if they choose not to use them, then that is on them.

I only know about only one real DEX and that is Bisq.
Everything else is Vaporware and it has nothing to do with decentralization.

[batang_bitcoin]

This might also only be the beginning. I predict within 10 years, we will have a world where much of the exchanges would begin blocking you if you use privacy enhancing services, networks and protocols.

That's what's likely is about to happen. Not just with these funds coming from those mixing services but also those privacy coins might end up literally be found as a normal cryptocurrency only in the dark markets. These exchanges are too strict and very compliant to the rules that are implemented to them and we've got no choice. It's either you choose to stay or value your privacy and choose another one that's giving you these attributes that we're looking for an exchange. I just hope the next trend would be the DEXes that really has a tight security and majority of the newbies and the tenured ones in the market use them.

[bbc.reporter]

I also used to criticize exchanges, however, they do not have a choice, I reckon. They are required to stay compliant with regulations or they will have their business license and other licenses for operation to be removed. They will also be having the risk of lawsuits.

Nobody forced them to create and own centralized exchanges, and they can move it to some other countries or work on becoming decentralized.
With that attitude nobody would ever creating anything useful for people (Bitcoin for example), if only blindly following new draconian rules and regulations.

Jesse Powell, the CEO of Kraken has always been in support of privacy for the community, however, if he is given the choice of keeping Kraken in operation or go against a lawsuit, I am quite sure he will choose Kraken.

Support for privacy is shown if you stand up and choose to fight for what is right, but I guess real problem is that not enough people care about privacy.

This is not my attitude, this is only an observation of our reality. More than 10 years of the cryptospace existing, what has occured? What were the changes? Where is the disruption storyline that has become very popular on 2015? What is bitcoin and other cryptocoins being used for? What is the basis for the value of these coins?

[cabron]

I also used to criticize exchanges, however, they do not have a choice, I reckon. They are required to stay compliant with regulations or they will have their business license and other licenses for operation to be removed. They will also be having the risk of lawsuits.

Nobody forced them to create and own centralized exchanges, and they can move it to some other countries or work on becoming decentralized.
With that attitude nobody would ever creating anything useful for people (Bitcoin for example), if only blindly following new draconian rules and regulations.

Jesse Powell, the CEO of Kraken has always been in support of privacy for the community, however, if he is given the choice of keeping Kraken in operation or go against a lawsuit, I am quite sure he will choose Kraken.

Support for privacy is shown if you stand up and choose to fight for what is right, but I guess real problem is that not enough people care about privacy.

This is not my attitude, this is only an observation of our reality. More than 10 years of the cryptospace existing, what has occured? What were the changes? Where is the disruption storyline that has become very popular on 2015? What is bitcoin and other cryptocoins being used for? What is the basis for the value of these coins?

Its very possible. Jesse Powell will change his stance once threatened by authorities. For now there is no need to something since he isn't pressured yet.  But once authorities knocks, there will be negotiations and he will do what FTX does unless he wants Kraken to face legal actions for the  authorities will find faults to it.

[2stout]

The writing is ever apparent on the wall, mixers are top government priority, public enemy #1 for the week and short term foreseeable future.  The mixers will be targeted for eradication or attempted forced compliance so CeFi will tread verify lightly and on eggshells.