Crypto privacy protocol Railgun has denied accusations of being used by North Korea and other U.S.-sanctioned entities to launder cryptocurrency, asserting that its zero-knowledge-based technology prevents such misuse and there is “no evidence” supporting the claims.
The denials come as Railgun’s total volume approaches the $1 billion mark, aided by an X post from Ethereum co-founder Vitalik Buterin that praised and defended the privacy protocol.
Railgun, founded in January 2021, employs zero-knowledge (ZK) cryptography to shield wallet balances, transaction history, and transaction details, allowing users to interact with decentralised apps (DApps) on Ethereum and other supported chains while maintaining privacy.
Blockchain security firm Elliptic has described Railgun as a “prime alternative to Tornado Cash” after the U.S. government imposed sanctions on the crypto mixer. In January 2023, the FBI stated that North Korean cyber attackers used Railgun to launder over $60 million worth of Ether from the 2022 Harmony Bridge heist.
In response to crypto reporter Colin Wu, Railgun dismissed the claim that Lazarus had used its privacy protocol, calling it “false reporting” and emphasising that the group is blocked from using Railgun through its “Private Proofs of Innocence” (Private POI) system, which has been live for over a year.
The Private POI system uses cryptographic assurance to verify that funds entering the Railgun smart contract do not originate from a known list of undesirable transactions or actors.
Buterin has defended Railgun, stating that “privacy is normal” and that the protocol’s privacy pools make it “much harder for bad actors to join the pool.”
Privacy is normal.
Railgun uses the privacy pools protocol ( https://t.co/DekkatsMR5 ) which makes it much harder for bad actors to join the pool without compromising users’ privacy.https://t.co/MG0huDzpAu
— vitalik.eth (@VitalikButerin) April 15, 2024
Railgun’s total volume is nearing $1 billion, while its total value locked on Ethereum, where most of its activity occurs, has surpassed $25 million according to Dune Analytics data.
Railgun’s token, Railgun (RAIL), rallied on April 15 after it was reported that Buterin had sent 100 ETH worth around $325,000 to Railgun earlier that day. The token is now trading at $1.18, marking an 86.3% increase over the past week.