Ethereum privacy pool 0xbow secures 3.5 million in funding, Vitalik endorses compliance breakthrough.

Ethereum privacy startup 0xbow has completed a $3.5 million seed round financing, led by Starbloom Capital, with angel investors including Balaji Srinivasan also participating. 0xbow is the project behind Privacy Pools, which are a key component of the Ethereum Foundation's Kohaku Wallet project.

Top institutions and angel investors gather

(Source: 0xbow)

According to news released on November 18, this round of $3.5 million seed financing was led by Starbloom Capital, with a lineup of participating investors that can be described as luxurious. BOOST VC is known for investing in early-stage technological innovation projects, and its participation indicates recognition of the potential of privacy pool technology.

The lineup of angel investors is equally star-studded. Balaji Srinivasan, former chief technology officer of the largest compliant cryptocurrency exchange in the United States and a well-known cryptocurrency thought leader, brings technical authority and industry influence to the project with his investment in 0xbow. Additionally, 0xbow has raised funds from several angel investors, including Sam Kazemian from Bankless, Number Group, Public Works, and Dan Finlay from Metamask.

It is also worth noting that Vitalik Buterin participated in the seed round pre-selection held by 0xbow in March 2024. Although the specific investment details of Buterin have not been made public, his participation itself is a strong endorsement of the project's technical direction. As the founder of Ethereum and a pioneer in blockchain privacy research, Buterin's support provides 0xbow with unparalleled technical credibility.

0xbow was co-founded by Ethereum pioneers Ameen Soleimani, Nathaniel Fried, and Zak Cole. Soleimani is the founder of MolochDAO and MetaCartel, and is highly regarded in the Ethereum community. This founding team's deep Ethereum background, combined with a top-tier lineup of investors, lays a solid foundation for the success of the privacy pool project.

Privacy Pool Technology: Practical Applications Studied by Vitalik

Privacy Pools is a protocol designed to compliantly anonymize funds, representing a significant improvement over traditional privacy tools like Tornado Cash. This project is based on research regarding Association Sets, co-authored by Ethereum founder Vitalik Buterin, where Association Sets essentially serve as a list that can prevent malicious actors from obscuring funds while also monitoring suspicious activities.

The core issue faced by traditional privacy mixers like Tornado Cash is the inability to distinguish between legitimate privacy needs and illegal money laundering activities. When users deposit funds into the mixer, those funds are mixed with all other users' funds, including those that may come from hacks, fraud, or other criminal activities. This indiscriminate mixing has led regulators to view the entire service as a money laundering tool, ultimately resulting in Tornado Cash being sanctioned by the U.S. Treasury.

The privacy pool solves this problem through a linking set mechanism. When users withdraw funds, they can prove that their funds come from a “clean” subset, rather than being mixed with all funds. This proof uses zero-knowledge proof technology, which protects user privacy while demonstrating the legitimacy of the source of funds to regulatory authorities.

The Core Differences Between Privacy Pools and Tornado Cash

Tornado Cash: All funds are mixed indiscriminately, making it impossible to prove their legitimate source, and it is viewed as a money laundering tool.

Privacy Pool: By separating clean funds through association sets, compliance can be proven, achieving a win-win situation for privacy and compliance.

“We are addressing a problem that the industry has yet to solve: how to protect people's financial privacy while not providing shelter for illegal activities,” said Nathaniel Fried, CEO of 0xbow. “You shouldn't be forced to choose between privacy and compliance.” This concept is at the core value proposition of the privacy pool project.

“Privacy tools must be designed with compliance as a goal from the very beginning, rather than adding compliance features afterward,” said Taylor Monahan, advisor at 0xbow and security engineer at MetaMask. “The ASP architecture indicates that you can balance privacy and accountability at the same time.” This concept of “designing for compliance” is key to how Privacy Pool differentiates itself from its predecessors.

Market Performance and Expansion Plan

Since its launch on the Ethereum mainnet in March 2025, Privacy Pools has reportedly processed approximately $6 million in transaction volume for over 1,500 users. Although this figure is relatively small, it demonstrates the genuine demand in the market for compliance privacy tools, especially considering that the project has only been running for a few months and is still in its early stages. The number of over 1,500 users also serves as preliminary validation of the product-market fit.

This new funding will help the project expand beyond the Ethereum mainnet and develop more features. Currently, the privacy pool operates only on the Ethereum mainnet, but the blockchain ecosystem is multi-chain, and users need to enjoy privacy protection across different chains. Expanding to Layer-2 solutions like Arbitrum, Optimism, and other EVM-compatible chains such as Polygon and BNB Chain will significantly enhance the accessibility of the privacy pool.

In July, 0xbow expanded its “multi-asset privacy pool” feature for the first time, starting to support Sky's USDS stablecoin. This is an important product milestone as it demonstrates that the privacy pool is not only applicable to native cryptocurrencies but can also support other asset types such as stablecoins. Stablecoin privacy is a huge market demand, with both businesses and individuals looking to protect financial privacy when using stablecoins for payments.

0xbow has also launched the Tornado Cash associated proof pool, allowing users to distinguish their funds from illicit activities on the Tornado Cash protocol. This feature is highly innovative as it provides a way for legitimate users who have previously used Tornado Cash to “clean” the sources of their funds. Many users utilized the service to protect their privacy before Tornado Cash was sanctioned, and their funds are now stigmatized. The association proof feature of the privacy pool allows these users to demonstrate that their funds are not related to criminal activities.

The Future Balance Point of Privacy and Compliance

The successful financing and early market validation of the privacy pool project demonstrate a new direction for the development of blockchain privacy tools. Over the past decade, privacy and compliance have been viewed as opposing extremes: either complete transparency at the expense of privacy or complete anonymity facing regulatory risks. The privacy pool proves the feasibility of a third path: achieving a balance between privacy and compliance through technological innovation.