Aztec Responds To Allegations FTX Froze User Funds

Aztec responds to allegations that FTX froze user funds simply because they interacted with the protocol i.e. because they are connected with Aztec Network. Aztec has responded to the allegations by restating its key principles and stating that it “will not be inactive in combating illegal activities.”

Aztec Responds To Allegations

According to Wu Blockchain, the allegations of FTX users having their accounts suspended stemmed from a series of tweets from a small number of accounts. FTX CEO Sam Bankman-Fried reacted, but did not confirm or deny that any accounts had been locked.

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://t.co/FVOGHUa4TJ

— SBF (@SBF_FTX) August 19, 2022

Aztec also stated that it is working on a series of enhancements that would “effectively remove the capacity of criminal actors to transmit stolen monies through Aztec.” Deposit caps, rate caps, pending deposit caps, and changes to the “escape hatch window” are among them.

The Aztec Network will be updated as a result of the upgrades:

• Reduce the rate at which deposits and withdrawals are made 
• Make it simpler to identify at-risk addresses
• Prevent unauthorized users from avoiding Falafel, the open-source implementation of Aztec’s rollup.

Unlike other web3 protocols, which have been forced to shut down or comply with US restrictions, Aztec has adopted a different route. According to the network, it “restricts behavior rather than individuals.”

Aztec Explains

The network stated that if it (the network) is used to harm the users, then they have certainly failed its mission. It continued on to saying that they are currently working with partners in order to identify the people who are using stolen funds, in the hopes that they can unmask them using information, that is publicly available, outside the Aztec system.

“We believe the above efforts practically eliminate the ability of bad actors to move stolen funds through Aztec, while preserving the ability of consumers to interact with legitimate Ethereum services. We will include further details and analysis in a blog post.” the team stated.

“Practical deterrence makes the network intolerant of illegitimate use in a credibly neutral way:

It restricts behavior, rather than individuals.

It is proactive, rather than reactive.

It is measurable, rather than counterfactual.” The Aztec twitter account said.

At a critical juncture for blockchain-based privacy, Aztec concluded its Twitter thread with a moving message:

“If privacy is outlawed, only outlaws will have privacy.”

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