The Ethereum privacy protocol Railgun denies being used for cryptocurrency money laundering by North Korea and other entities sanctioned by the United States, stating that there is “no evidence” to support these allegations and that its zero-knowledge (ZK) proof technology can prevent such situations.
Railgun was established in January 2021 and uses zero-knowledge encryption technology to conceal wallet balances, transaction history, and transaction details, allowing users to use decentralized applications (DApps) on Ethereum or other supported chains while maintaining privacy.
According to a report by “Wu Shuo Blockchain” released on Monday (15th), Vitalik Buterin, co-founder of Ethereum, has been interacting with Railgun using small amounts of Ether (ETH) almost every month over the past six months. Vitalik responded to the report, saying, “Privacy is normal. Railgun uses privacy pool protocols to make it harder for malicious actors to join the pool without compromising user privacy.”
An alternative to Tornado Cash?
Following the report by “Wu Shuo Blockchain,” citing a report by blockchain analytics company Elliptic, it is stated that the Lazarus Group, a North Korean hacker group, is also a user of Railgun. In January 2023, the Federal Bureau of Investigation (FBI) confirmed that North Korean cyber attackers had used Railgun to launder over $60 million worth of Ether stolen in June 2022. After Tornado Cash was sanctioned, Elliptic referred to Railgun as the main alternative to that mixing protocol.
However, Railgun denied in its response to the report that Lazarus had used the privacy protocol, calling it “false reporting.” They stated, “Proof of Innocence” (POI), also known as Privacy POI, was launched by Railgun researchers and contributors in January 2023. This technology uses cryptographic guarantees to ensure that funds entering Railgun smart contracts do not come from known illicit transactions or actors. Users are required to create a ZK proof to demonstrate that their funds are not part of the default list of transactions and wallets.
According to data from Dune Analytics, Railgun’s total transaction volume reached $962.8 million, and its total value locked (TVL) on Ethereum exceeds $25 million. After the report about Vitalik’s use of Railgun was released, the protocol’s token, RAIL, experienced a rise of up to 200%. As of the time of this publication, the trading price of RAIL is $1.147.
Source: Cointelegraph
