- Ethereum co-founder Vitalik Buterin has been interacting with Railgun for months.
- North Korean hackers have favored Railgun in the past.
- The Ethereum chief has defended his use of the privacy protocol by citing a novel compliance integration.
The use of Blockchain privacy tools remains a polarizing topic.
On one side, advocates maintain that blockchain privacy tools are necessary for users to protect their transaction history and avoid unwanted attention from bad actors that could trace them using that history. On the other hand, there are very real concerns over how the greater anonymity offered by these privacy tools can and has been exploited by bad actors.
The revelation of Ethereum co-founder Vitalik Buterin‘s use of Railgun, a crypto privacy protocol favored by North Korean state-sponsored hackers, has recently rehashed the blockchain privacy debate.
Vitalik Buterin: “Privacy is Normal”
On Monday, April 15, sharing Arkham Intelligence data, Wu Blockchain reported that Buterin had transferred 100 ETH worth approximately $325,000 at the time to Railgun. Per the data, the Ethereum co-founder has been interacting with the protocol over the past six months with small amounts of ETH, from 0.1 ETH in the first instance to about 30 ETH in March 2024.
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Responding to the speculation surrounding the report, Buterin defended his use of Railgun, a protocol used by the North Korean-backed Lazarus Group to launder at least $64 million from the June 2022 Harmony Bridge hack, by quipping, “privacy is normal.”
Despite Railgun’s history with the Lazarus Group, the Ethereum co-founder further asserted that the protocol made it difficult for bad actors to join due to its implementation of “privacy pools,” a concept he had championed in September 2023 to preserve privacy and address regulatory concerns.
The Perfect Middle Ground?
At its core, the privacy pools concept offers a method for separating transactions from suspicious sources and legitimate ones in the mixer. To this end, privacy pools employ “association sets” and zero-knowledge proofs.
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Association sets divide pooled assets into subsets based on the legitimacy of their sources. To withdraw from the pool, users have to provide ZK proof that they are withdrawing legitimate funds, making it difficult for bad actors to use it while still maintaining user privacy.
Commenting on Buterin’s recent Railgun use, ConsenSys Lawyer Bill Hughes suggested that using protocols like Railgun, which put effort into driving out bad actors, could pose a reduced legal risk.
Following Buterin’s endorsement, RAIL, the governance token of Railgun DAO, is now trading at $1.33, representing a 139% increase in the past 24 hours.
On the Flipside
- Privacy pools are still new and largely untested.
- Like Railgun, Buterin has defended the use of the sanctioned Tornado Cash in the past, stressing that it could also be used for good. He had used it to donate to Ukraine’s war efforts against Russia.
Why This Matters
Blockchain privacy tools continue to divide opinions amid their potential for abuse, which has drawn regulatory ire. Buterin’s statements around Railgun suggest that progress is being made to protect these tools against abuse while preserving user privacy.
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