Incoming Zcash/ZODL scandal: $589k frozen after Zcash swapped through Near Intents.

There's this one guy/bot on nostr that posts every time stablecoin funds are frozen, really makes me hesitate to touch them.

https://njump.to/nevent1qqsxeju8d325ynptkva0h9zh3dnu8sx67hsrgewjfvry0t48elzflfgpzamhxue69uhhyetvv9ujuurjd9kkzmpwdejhgtczyp7urrlsamzhwuzt8w9alry9uv8re9tnjwwjatlqcvcacx9n0qvpuqcyqqqqqqgex4w02

The thing that always kept me away from Zcash has nothing to do with the protocols or VC funding, but the available wallets to actually use Zcash. When you access Zcash's website and search for wallet software, you will find almost exclusively mobile wallets with the few desktop wallets supporting Zcash having multi–wallet integrations with built–in telemetry and analytics while providing no certainty as to whether the user actually owns their keys. This is by far the biggest element keeping me away from actually using Zcash.

If they had an equivalent to the Monero GUI or Monero CLI, I would love to at least play around with Zcash, but neither one really exists in the same way. There is a CLI option, but iirc it requires the downloading of the full node. It is an asinine concept to assume every crypto user exclusively uses mobile wallets for payments and it is clear who their target demographic is. If they truly cared about privacy, they would spend the time and effort to make functional desktop wallets with Linux support for users who actually value their privacy. However, none of that appears to exist. Even Cake Wallet does not appear to feature support for Zcash on their desktop wallet.

I do not fit the bill of a mainstream crypto user. I'm a power user who uses automated systems to create hundreds of wallets for different purposes rather than relying on just one or two wallets. I go the extra length to ensure coins, activity, and systems are properly compartmentalized. Is it perfect? No, but it's about as far as I can take things without it becoming completely unmanageable.

If you want to make a privacy coin, it's not just about creating some shitty protocol with shitty cryptography — it's about the software the end–user will use on a regular basis to engage in desired activities and transactions. In my mind there has to be support for Linux, anonymization networks, decentralized systems, and privacy–focused distros like Tails and Whonix. If that support does not exist, then it's not really a privacy coin in practice.

It sounds like zcash and near intents haven't done anything wrong here because the usdc was delivered to the user. The real problem is that the usdc was frozen by its own smart contract, after the swap???

Still, that's fucked. I didn't expect that to happen to a pseudonymous account. This makes me worried for the future of pseudonymous RWA accounts in general.

If I buy ondo tokenized assets, or paxg tokenized gold with monero, will that get frozen too now? I know its been possible all along but this could set a precedent that invalidates their entire offer.

I'm not jumping ship but I'll be keeping a more active interest in frozen accounts for sure. Thankyou @xenu and @avarice

@Nebuchadnezzar_II
The reason zcash is in the wrong is because they were shilling a centralized third party as decentralized and trustless.
Near Intents did freeze the transaction with whatever smart contract managed the usdt. Check out the zcash forum thread there is a clear breakdown of the funds being withheld by Near Intents.

If I buy ondo tokenized assets, or paxg tokenized gold with monero, will that get frozen too now? I know its been possible all along but this could set a precedent that invalidates their entire offer.

I think it depends on where you are buying it from. Right now everything is a grey area, but the line being drawn is that without KYC, you can't offboard.

@xenu I just read the article and understand it better now.
So the censorship did not use the USDT contract itself, but was applied through a Near Intents contract? Is that right?
That's much less worrying in my opinion because its a swap service not a stablecoin itself.

@Nebuchadnezzar_II It was because of Near Intents HOWEVER it also could happen with stablecoins.
This is where things get confusing. If you have been reading the news lately I'm sure you've seen reports of crypto being frozen...those are stablecoins. And basically there is new legislation that has been passed in the US where they are enforcing stablecoins to freeze things (because most stablecoins have this property). So yeah, this is actually very worrying and to be honest it is part of the case of Monero usage rising in the long term because stablecoin usage (which is becoming more popular) will get further regulated over time.
The censorship occurred through Near Intents for whatever reason and because they now hold control of the funds there is nothing anybody can do until Near Intents reaches a decision or they are sued. The only info we have is this forum post, although he posted basically all the receipts so it is pretty up-to-date.

@xenu
That makes sense, thankyou.

I've not seen that news actually apart from that Iranian bank that got mentioned on here.

I know they can put whatever rules they choose on a stablecoin, but so far I have believed that they will allow pseudonymous holders to exist, and sell to the secondary market and haven't seen any evidence to the contrary. But I'll be looking more into these developments anyway.

@xenu Cashing out is always the more dangerous of the two processes. You can pretty easily move clean funds into the underground just as it's easy to use real cash money to buy drugs from your local dealer. Converting underground proceeds to clean cash on the other hand is fraught with risk, because it always leaves a paper trail and other people are likely involved. Just look at the number of darknet admins who could have gotten away with their crimes had they not cashed out or at least not cashed out the way they did — such as using darknet crypto to buy themselves personal domain names or sending the crypto to a KYC exchange so they can buy themselves expensive cars.