Vitalik demos Privacy Pools launch on Ethereum

Privacy Pools have introduced a semi-permissionless solution on Ethereum for users to transact privately and confirm that their funds aren’t tied to unlawful activities.

Ethereum co-founder Vitalik Buterin quickly deposited one Ether, making him one of the first on the platform.

0xbow.io launched the new privacy tool, and Vitalik showed his support by making one of the first deposits after endorsing the project.

To ensure that transactions in the anonymous Privacy Pools aren’t connected to illicit activities, 0xbow.io uses “Association Sets” to batch the transactions and screens for malicious actors such as phishers or hackers.

The “dynamic“ feature of the Association Sets, as 0xbow.io described, ensures that if a transaction gets flagged as illicit later, the system can remove it without impacting other deposits.

Users can click the “ragequit“ button to reclaim their funds to the original deposit address if the system disqualifies their deposit.

0xbow.io’s vision of “Making Privacy Normal Again” reflects this innovation, which also aims to comply with regulatory standards.

Regulators have raised concerns over privacy protocols, especially since criminal actors increasingly use them for money laundering.

The US Treasury’s Office of Foreign Assets Control sanctioned Tornado Cash after linking it to approximately $7 billion laundered by the Lazarus Group, a North Korean state-sponsored hacker group, from August 2022 to March 2025.

The US appeals court ruled in January 2025 that the sanctions on Tornado Cash were unlawful, which led to the privacy tool’s removal from the OFAC blacklist.

0xbow.io mentioned that although the deposit limit starts at 1 Ether, the platform will raise it once the privacy protocol undergoes more robust testing.

With 69 deposits made, 0xbow.io transferred over 21 ETH into Privacy Pools, including one from Buterin.

Along with Buterin, 0xbow.io revealed that it had attracted investment from Number Group, BanklessVC, Public Works, and a number of angel investors.

0xbow.io acknowledged Buterin, Jacob Illum from Chainalysis, and two University of Basel academics for their contributions to the September 2023 white paper detailing the construction of Privacy Pools.

The paper, which has been downloaded more than 12,000 times and referenced in nine other papers, also included contributions from Ameen Soleimani, 0xbow.io’s strategic adviser.

Joe van Loon, a former Apple engineer, co-founded Audit Wizard, the firm that conducted a successful audit of the Privacy Pool code.

As noted in the Chainalysis 2025 Crypto Crime report, published on January 15, illicit transfers in 2024 reached over $41 billion, representing 0.14% of the year’s total on-chain volume.

Chainalysis observed an 11% decrease from 2023 but forecasted that the amount could grow to nearly $51 billion as more criminal-related addresses are identified.