Privacy Cash Pauses Deposits After $1.2M in Binance-Linked Inflows

Immediate Response

Following the attack on the Binance platform, the Privacy Cash project decided to temporarily suspend deposit operations. This measure comes after investigations identified approximately $1.2 million in theft-linked funds directed into its privacy pools. While deposits are closed, the team confirmed that withdrawals remain available for existing users. They are working to consolidate the wallet verification system.

Official Statement

The announcement was made on November 4 via a social media post. The team directly linked the decision to the recent Binance security incident. The project's original goal was to offer financial privacy tools for ordinary people, not to facilitate criminal activity. „When we started Privacy Cash, our goal was to build privacy tools for regular people, not to allow crime,”the team wrote in the announcement. During the pause, they are improving the screening process to prevent malicious actors from using the product.

Technical Data on Stolen Funds

Technical data on the stolen funds shows a complex distribution across multiple chains. On-chain monitoring initially identified 8,567 SOL deposited by an address linked to the Binance hacker on November 3. These transfers were valued at approximately $798,000. Later, research firm Elliptic detailed that a total of about 41 ETH and 9,600 SOL entered the protocol on November 3, with a combined value of roughly one million dollars. The November 4 update added another approximately 2,300 SOL, bringing the total value of theft-linked deposits to about $1.2 million.

Existing Verification System

The project's official documentation describes an existing verification system. Signed deposit transactions pass through an intermediary that checks wallet addresses using CipherOwl technology. If an address is flagged as malicious, the deposit is rejected. The system supports multiple chains, including Solana, Ethereum, Base, BNB Chain, and Robinhood Chain. Users deposit tokens into a pool and later withdraw them to a destination address. Zero-knowledge proofs prevent public linkage between the two operations. For withdrawals, a proof generated on the user's device prevents the intermediary from altering the destination or amount. However, the documentation acknowledges that observers can deduce connections when distinct amounts enter and exit the pool in close time intervals.

Next Steps

The announcement did not specify exactly how the theft-linked deposits managed to enter the privacy pools. It was implied that the screening process needs improvement. No specific timeline was set for resuming services. In responses to users asking about service availability, the team confirmed they are working to increase the product's robustness. They asked users to follow future updates.

Binance Recovery Efforts

In parallel with the fund tracing, Binance continues its recovery efforts. Deputy CEO Richard Teng stated on November 3 that the exchange has restored 98% of the assets affected by the $6.34 billion attack. It continues to buy less liquid tokens. He also announced the completion of the latest reserve proof.