Aztec relaunches zk.money privacy wallet with sanctions screening baked in

Aztec Labs relaunched zk.money, its self-custodial privacy wallet for stablecoin payments, on September 29 on the Aztec Network, an Ethereum Layer 2, three years after the original version began winding down in March 2023.

Aztec announced the relaunch on X, pointing to the first zk.money’s track record: more than 75,000 wallets and over $100 million in volume between its 2021 debut and its shutdown. The wallet hides payment amounts, balances and recipients from public view, and users claim Ethereum Name Service tags such as bob.zk.money that resolve to deposit addresses.

What separates this launch from earlier privacy tools is the compliance layer built into the wallet itself. Every Ethereum deposit and withdrawal address is screened against a sanctions policy, and a sealed server co-signs operations inside zk.money. Aztec’s documentation says the server cannot spend user funds on its own, and the company says the wallet’s non-custodial design means it cannot spend, move or freeze deposits.

“Now that the network is live and stewarded via the non-profit Aztec Foundation, our team at Aztec Labs is back shipping open-source privacy products on top of it,” Aztec Labs CEO Joe Andrews said.

The bet is that screening and self-custody can coexist, four years after the Treasury’s Office of Foreign Assets Control sanctioned Tornado Cash in August 2022 and reshaped the privacy-coin and mixer era. Privacy inside zk.money is also partial by design: Aztec’s documentation says a deposit from Ethereum still reveals the sender and the amount, even when the recipient stays private.

Strict caps while the system is new

Each deposit, payment and withdrawal must stay below $2,500, and all users share a $50,000 daily deposit allowance that replenishes over time, with a new contract required to raise the limits. Users can deposit DAI, USDC and USDT from Ethereum; USDC and USDT are converted to DAI on entry, leaving DAI as the only currency inside the wallet. Andrews said Aztec Labs picked DAI because it considers it the most decentralized of the mass-market stablecoins used today on Ethereum. A deposit costs 35 cents plus Ethereum fees, and a withdrawal costs 20 cents.

The wallet also launches with disclosed security caveats. Contributors revealed a critical flaw in the network’s V5 proof system in August, and the fix is planned for V6. Andrews said zk.money went live before the flaw is fixed, with a system called Oxide checking payments for errors caused by software bugs in the meantime. Aztec’s own documentation warns that the software has not been fully audited and that critical bugs are possible.

Back after a three-year rebuild

“We sunset in 2023, not because private payments were a failed thesis, but because they needed infrastructure that did not yet exist,” Andrews said, adding that the old system was hard to extend and did not scale globally.

The relaunch arrived eight days after Aztec activated private smart contract execution on September 21, and after two older Aztec smart contracts tied to long-shut-down products were exploited in June. Aztec said those contracts were not part of the current network and did not affect zk.money. DeFi protocol integrations and a mobile app are planned for the fourth quarter, with no launch dates named.