Tornado Cash dev says 'sequel' to crypto mixer aims to be regulator-friendly

cointelegraph.com:

A former Tornado Cash developer claims to be building a new crypto mixing service that aims to solve a “critical flaw” of the sanctioned crypto mixer — which he hopes will convince U.S. regulators to reconsider its position on privacy mixers.

The code of a new Ethereum-based mixer, “Privacy Pools,” was launched on GitHub on Mar. 5 by its creator, Ameen Soleimani.

In a 22-part Twitter thread, Soleimani explained that the “critical flaw” with Tornado Cash is that users cannot prove that they’re not associated with North Korea’s Lazarus Group or any criminal enterprise for that matter.

1/ We fixed @tornadocash v0 of https://t.co/Nt4b2Tgx1D is live on @optimismFNDtest out the demo, but please note:- this is experimental code- it has not been audited- the trusted setup is untrustedread the full story anon https://t.co/9nAU3RrgpN

With Privacy Pools, however, Soleimani explained that depositors and withdrawers could opt out of an anonymity set that contains an address associated with stolen or laundered funds.

This feature of Privacy Pools is executed with zero-knowledge (ZK) proofs, meaning that the privacy of the user is preserved:

Soleimani provided a demonstration of how Privacy Pools is used:

13/ Our demo is live - https://t.co/Nt4b2Tgx1D Now, users have the option to help regulators isolate illicit funds, without revealing their entire transaction history. Let's watch a brief video of it in action: pic.twitter.com/An9lWx6jfr

The developer hopes the solution will empower “the community to defend against hackers abusing the anonymity sets of honest users without requiring blanket regulation or sacrificing on crypto ideals.”

While Privacy Pools is already live on Optimism, Soleimani noted that the first version of the privacy