Traditionally, we start with an explanation. Most cryptocurrencies are pseudo-anonymous. This means that the owner of the conditional address 0xB0173B1a3BB997F6d3EDaFcda6de58EFe79B7932 will be unknown when transactions in the blockchain are examined.

However, if his identity is revealed – for example, through frequent transfers from a cryptocurrency exchange where he showed documents in a KYC procedure – then all of the user’s activity will be plain to see. Still, blockchain observers allow you to check the balance of the desired address, its transactions, interactions with various decentralised protocols and much more without any problems.

Cryptocurrency users can increase their privacy in two ways: by using private altcoins like ZCash or Monero, or by using so-called cryptocurrency mixers, which includes Tornado Cash.

In a nutshell, the mixers aggregate users’ coins into a single mass, and then distribute different amounts to new addresses specified in advance by the users. By doing this, the connection between a certain person’s addresses is lost, and their coins essentially end up in a new wallet, with no connection to the previous one.

Tornado Cash was blocked by US authorities in August 2022. In order to do so, the authorities put a list of blockchain addresses that had previously interacted with the platform on the so-called SDN list, or official blacklist of individuals with whom US citizens cannot interact. This means that the owners of the addresses are now also not allowed to interact with various exchange-type platforms.

Shortly thereafter, developer Alexey Pertsev was arrested in the Netherlands and suspected of facilitating money laundering. Since then, the situation with Pertsev has not changed, but other developers are trying to create alternative privacy platforms.

How to improve privacy with cryptocurrencies

In general, one of the main reasons for sanctions against Tornado Cash was the fact that the platform was often used by North Korean criminals. They laundered money using the service, and that drew a lot of attention from US intelligence agencies. However, even the Congress was later asked about the reasonability of blocking Tornado Cash.

Privacy Pools is an ideological extension of Tornado Cash, as explicitly stated by the developers of the project. They include Amin Suleimani, known for his significant contribution to the development of the blockchain platform in its early days.

According to Decrypt’s sources, Privacy Pools is designed to anonymise transactions on Etherium. At the same time, the developers made sure that their project would not be targeted again by the US authorities. To this end, they have created an algorithm that can confirm that PrivacyPools users are not located in North Korea and are not associated with crypto-addresses that have previously been found to be fraudulent.

In this way, the developers essentially want to implement the right of cryptocurrency owners to privacy. They do have it, and not all blockchain mixer users are criminals.

The platform works in the same way as Tornado Cash. However, when users click on the withdrawal option, they can generate a so-called zero-disclosure proof. It in this case publicly shows that the owners of the cryptocurrency are not using any criminal address within the blockchain, while not revealing their identity.

As a reminder, zero-disclosure evidence is used in cryptography to confirm the veracity of information without directly disclosing it.

Will such a feature save Privacy Pools from the attention of US intelligence agencies? Most likely, sooner or later this platform could face problems, as US regulators are now markedly more sensitive to the crypto industry amid growing activity of North Korean hackers. If Privacy Pools developers further sacrifice customer anonymity for the sake of security, the platform is unlikely to gain traction in the crypto community.


In the meantime, we can assume that the platform will still be active for some time. Accordingly, digital asset lovers will have the opportunity to exercise their right to privacy through the operation of a smart contract that actually accomplishes the tasks at hand. However, as the events of the summer of 2022 have made clear, such a thing could come to an end at any time. Therefore, expecting a novelty to become a full-fledged and long-term replacement for Tornado Cash is probably not a good idea.