A new crypto mixer promises to be tornado cash without the crime

That conversation, he says, is about whether it is technically possible to satisfy the government’s need to track the passage of stolen cryptocurrency while still giving crypto users the financial privacy they demand.

Privacy Pool will use a cryptography technology called “zero-knowledge proof”, where users can demonstrate that their crypto withdrawals are not linked to deposits made by known criminal wallets.

The basic premise, Soleimani says, is that users can “remove without revealing who they are by publicly proving who they are not.”

However, Soleimani admits that the exact mechanics of the zero-knowledge proof are a mystery even to him. He decided to use it after being contacted by an anonymous developer known as Twister, which works on implementing the technology. Soleimani says he doesn’t know much about Twister, but isn’t worried about working with an unknown number because the service is just a pilot at the moment.

Andrew Thurman, chief content officer at blockchain analytics company Nansen, says this type of proof is “poised to play a key role” in providing anonymity to crypto users. The technology is gaining traction in crypto circles as developers explore various applications; Ethereum sidechain Polygon uses it particularly extensively, and Buterin has been vocal about its potential.

Under Soleimani’s system, individual users will be responsible for marking which other depositors they do not wish to be associated with. In practice, he imagines that would mean using blacklists drawn up by companies like Nansen, which monitor public blockchains for crime.

In theory, such a design would also limit the amount of funds linked to criminal activity passing through the mixer, he argues, “because everyone else who uses it will have the ability to isolate [criminal addresses],” reduces the size of the pool in which bad actors can hide.

The system would not mean that criminals could not operate on the mixer, just that they would not have access to full liquidity.

Soleimani says an alternative system, in which an administrator maintains a block list to ban bad actors from the platform entirely, would be prohibitively expensive because adding addresses to a blockchain host list costs money each time, and criminals often jump between wallets. It will also raise ethical questions about whether a person should make an assessment of who is allowed to use the service.

“I don’t think I should be responsible for deciding who the good and bad people are for everyone — and neither should anyone else,” Soleimani says. “This system is different because it allows individuals to choose who they associate with or not.”

Soleimani says Privacy Pools’ clients are likely to be people who want to conduct transactions privately — those who want to donate to political causes anonymously or hide the size of their crypto-denominated salary, for example.

Even before the technical details were released, the project began receiving messages of support from the cypherpunk community, which advocates the use of cryptography to safeguard privacy.

“Cypherpunks like privacy, institutions like privacy, casual investors like privacy,” says Thurman. – It will be warmly welcomed.