In the aftermath of the events on December 29, 2023, following the delisting of nearly all available privacy tokens on the second-largest offshore exchange, OKX, another cryptocurrency exchange has followed suit. In what can be described as a crackdown on privacy-oriented blockchain networks, Binance, the world's leading cryptocurrency exchange, dropped a bombshell in the early hours of February 6. The exchange announced the delisting and suspension of corresponding deposits for a couple of tokens on February 20, including Monero, one of the pioneering privacy-centric blockchain networks in the cryptocurrency space. While it may not be the absolute first privacy blockchain, Monero is renowned for its strong privacy features, including ring signatures, stealth addresses, and confidential transactions, which provide users with enhanced privacy and anonymity compared to many other cryptocurrencies.
This sudden move left privacy-centric blockchain enthusiasts and the general crypto community bewildered and uncertain about the fate of other privacy-oriented Blockchain networks. Monero XMR, the so-called OG of privacy Blockchain networks, has been abruptly cast into the shadows as the world's largest exchange chooses to delist it. As the saying goes, "When the mighty oak falls, the bushes tremble"; what can we make of this development? Is this indeed a crackdown on privacy-oriented Blockchain networks, an attempt to sabotage the gains made in championing the cause of restoring individual prerogative and resolving the dichotomy between compliance and confidentiality? In the face of the uncertain demands of regulatory compliance, how can other privacy blockchain networks survive the hostile delistings from prominent exchanges? How does Aleph Zero fare in comparison to other privacy blockchains?
Confidentiality and Non-compliance are not Synonymous
Amid escalating regulatory pressure and the wave of hostile delistings from major exchanges worldwide, Aleph Zero has embarked on a path toward optimal blockchain privacy. This approach aims to overcome the limitations of the default design philosophy found in conventional blockchains, notably pseudonymity, which offers the lowest level of privacy. Aleph Zero's strategy integrates regulatory compliance into its framework while exerting influence across both enterprise-grade and end-user sectors.
In a tweet on the popular platform Twitter, Antoni Zolciak, co-founder of Aleph Zero, weighed in on the matter, responding to a post suggesting that if Monero could be delisted despite its robust fundamentals, other privacy-oriented tokens are susceptible to the same treatment. The co-founder called for calm, asserting that there are no conspiracies against privacy protocols, stating:
“Confidentiality and lack of compliance are not synonymous. Zcash remains listed on Binance as it approaches compliance proactively. We share a similar approach at Aleph Zero and have integrated AML/CFT by Coinfirm/Lukka, and will be deploying a Zero-knowledge (ZK)-ID system via idOS"
In response to the public outcry across social media, Monero issued a public statement on Twitter, stating the facts behind the delisting:
“The delisting is happening because Binance is now requiring that deposits come from a publicly transparent address. Monero has used stealth addresses for ALL addresses since its launch in April 2014. Monero allows selective disclosure with view keys but not a transparent address.”
This statement means that Monero offers a feature called view keys that allows users to selectively disclose certain information about their transactions. With view keys, users can provide others with permission to view specific details of their transactions, such as the transaction history or incoming funds, while keeping other information, like their account balance or transaction amounts, private.
However, Monero does not have transparent addresses. In Monero, transactions are private by default, obscuring the sender, receiver, and transaction amount using advanced cryptographic techniques. Therefore, while Monero offers selective disclosure through view keys, it does not have transparent addresses, which makes it a difficult process to track individual and/or multiple addresses and transactions on the Monero network.
In contrast, Aleph Zero differs from Monero in its approach to privacy and regulatory compliance, potentially allowing it to avoid the fate of privacy tokens being delisted. Aleph Zero positions itself as more than just a privacy coin by defaulting to transparency on its network, with confidentiality being optional and regulated by anti-money laundering (AML), countering the financing of terrorism (CFT), and identity products. By defaulting to transparency, Aleph Zero aims to safeguard against misuse by bad actors while still allowing users to maintain confidentiality when needed.
The successful integration between Aleph Zero and Lukka, the company that acquired Coinfirm in 2023, significantly upgrades transaction security and anti-money laundering (AML) compliance within the Aleph Zero blockchain ecosystem. This collaboration introduces an on-chain monitoring system that allows for the analysis of network activity to detect potential misuse and illicit activities such as money laundering and fraud, providing valuable data for exchanges, institutions, and regulatory bodies, ensuring a safer, more secure, and compliant blockchain economy.
Furthermore, Koinly's recent integration with Aleph Zero's native coin, AZERO, serves over 1 million users on its crypto tax management platform. Beyond tax calculations, Koinly aids in projecting capital gains to optimize tax strategies for the following year. Users seamlessly import trades, preview potential gains, and download tax documents. With a global presence in over 100 countries and trusted by 1.3 million users, Koinly is a leading tax reporting software. The platform automatically syncs data from exchanges, wallets, and blockchain addresses, ensuring precise transaction records with accurate timestamps and market prices. This integration provides users with comprehensive tools to manage their cryptocurrency taxes efficiently.
Conclusion
Although blockchain networks like Aleph Zero have strived to craft a suitable framework that accommodates individual prerogatives while also allowing for checks and balances by third-party blockchain analytics and anti-money laundering (AML) solutions, providing a pathway for vetting the network for illicit activities and fraud, the framework of regulatory compliance is not yet tangible. As a result, blockchain networks that are either private or public by design must develop innovative cryptographic solutions that have the potential to satisfy the demands of regulators and meet compliance standards without sacrificing individual prerogatives.
Lukka, founded in 2014, is a global company headquartered in the United States of America, specializing in providing institutional data and software solutions for the most risk-mature businesses worldwide. With a focus on bridging the complexities of blockchain data within the global crypto ecosystem with traditional business and reporting needs, Lukka stands at the forefront of innovation in this rapidly evolving industry. Following its acquisition of Coinfirm in 2023, Lukka has integrated Coinfirm's solutions into its offerings, enhancing its enterprise data capabilities.
Coinfirm's product teams continue to support businesses globally by providing on-chain analytical solutions to address risk and compliance challenges in the blockchain and digital asset space. Lukka's commitment to upholding institutional standards is evident through its attainment of various certifications and audits. With AICPA SOC 1 Type II and SOC 2 Type II Audits, Lukka ensures data quality, financial calculation accuracy, and completeness while effectively managing technology operational risks. Additionally, Lukka holds an ISO/IEC-27001 certification, indicating its adherence to internationally recognized standards for information security management systems.
Furthermore, Lukka has undergone a NIST Cybersecurity Assessment, demonstrating its dedication to maintaining robust cybersecurity measures. Through these qualifications, Lukka solidifies its position as a leader in the industry, showcasing its commitment to best-in-class technology risk governance and providing clients with the assurance of adherence to rigorous standards for data security, integrity, and operational excellence.
Comments