Railgun researchers said that US regulators and prosecutors haven’t unleashed a crusade against crypto privacy protocols and were largely positive and genuinely interested in understanding developments in the broader crypto market.
By Bhushan Akolkar
Updated
3 mins read
Railgun researcher and advocate Alan Scott Jr recently reported that senators and intelligence agencies of the United States aren’t opposed to privacy-focused crypto protocols. This comment comes recently after the US agencies unleashed a heavy crackdown on several privacy-oriented platforms and crypto mixers.
While speaking at the ETH Global in Sydney on Thursday, May 2, Scott said that he had recent conversations with senators and the FBI in Washington D.C. However, he didn’t find any hints of the crypto crusade on Capitol Hill. Scott also added that there are several people in the higher administration who are “generally smart, want to do right, and protect people”.
The privacy-focused protocol Railgun leverages smart contracts in order to ensure private transactions for DeFi users on the Ethereum blockchain, as well as Layer-2 networks such as Arbitrum and Polygon.
However, many see Railgun with the same lens as they see other crypto privacy protocols such as Tornado Cash. Last month on April 17, an account identified as the official Railgun account refuted accusations of being employed by North Korea and other US-sanctioned entities to launder illicitly obtained cryptocurrency. This rebuttal comes in response to an FBI statement alleging that Railgun was utilized to launder over $60 million in Ethereum (ETH) during the 2022 Harmony Bridge exploit.
Railgun asserted that its zk-proof technology and “Private Proofs of Innocence” systems are effective safeguards against malicious actors utilizing its protocol for illicit purposes. Scott said that the FBI is a large organization that has more concerns with bad actors looking to commit financial crimes, instead of having concerns with privacy protocols. He added:
“Their concern is the potential problems around impeding their ability to catch bad actors. Which is a great thing for them to be concerned with.”
Scott also added that he had conversations with several US regulators and prosecutors who were largely positive and genuinely interested in understanding developments in the broader crypto market. “Whenever we talk about crypto, or we talk about DeFi you know, they ask well-informed questions and try to understand what the tech is like, how it operates, and why people like us like it so much,” he said.
On April 24, the Department of Justice arrested the co-founders of the crypto mixer and Bitcoin wallet Samourai Wallet over allegations of money laundering. The DoJ alleged that Samourai handled $2 billion in unlawful transactions while facilitating $100 million in money laundering transactions.
Scott said that despite these actions against developers of crypto mixers like Tornado Cash and Samourai Wallet, there was not a crusade against privacy protocols in the broader crypto space.
“What [Railgun} is building is the disintermediation of finance, and DeFi is really quite a beautiful and very important thing to do. Privacy is a keystone element of that. So while we’re advocating for it and being loud and talking about privacy as an important thing — it’s completely normal, and it’s actually quite boring,” Scott said. “It’s already a part of the traditional finance that exists today.”
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
