Features writer

Jeffrey Gogo

Features writer

Jeffrey Gogo

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Jeffrey Gogo is a journalist with 20 years of experience in business, finance, cryptocurrency, and climate change news and analysis.

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Last updated: 

September 15, 2025

Key Takeaways:

• Vitalik Buterin tested Hinkal’s “Invisible Wallet,” a new tool that hides wallet activity to protect users from hacks.
• Crypto hacks surged to $163 million in August, rising for the third month a row.
• Analysts say privacy wallets can reduce exposure for high-net-worth holders, but warn they’re not a silver bullet against determined tracking.
• While zero-knowledge proofs allow for privacy-preserving compliance, experts say legal alignment remains uncertain.

Ethereum cofounder Vitalik Buterin has been testing Hinkal’s new ‘Invisible Wallet,’ a privacy tool that could mark a breakthrough at a time when wealthy wallets are increasingly targeted by hackers.

It comes as losses from crypto hacks soared to $163 million in August, rising for the third month in a row, according to PeckShield. In the last five years alone, crypto investors have lost over $4 billion in targeted attacks.

Web3 firm Hinkal says its wallet allows users to hide their on-chain activity. It claims that users, especially those with big balances, can use the wallet to deter attacks without compromising regulatory compliance.

Hinkal CEO Giorgi Koreli described crypto’s in-built transparency as a “bug”. He says it is not “normal” that over $4 trillion in crypto assets on public blockchains “can be monitored and potentially weaponized by others.”

“Privacy-preserving wallets are the future, because free surveillance and tracking can’t be,” Koreli argues.

In his test transfer in late August, Buterin sent 0.01 ETH ($44) from his wallet to an address owned by Hinkal using its invisible wallet, according to Etherscan data. Buterin’s wallet address is publicly labeled vitalik.eth.

As seen in the image below, Hinkal kept track of the Ethereum founder’s activity but did not share any more of his internal transactions for privacy reasons. Even his well-known address is obfuscated in the transaction record.

“If your assets can be watched, your transaction can be mapped and traced at every interaction,” Koreli wrote in an article posted on X. “It’s not freedom. It’s additional exposure.”

Hinkal’s Invisible Wallet ‘Is Not a Silver Bullet’

The blockchain is, by design, a public ledger that broadcasts wallet activity. As Koreli puts it, every transaction, position, and trading strategy is visible to competitors, as well as cybercriminals.

He says crypto’s “radical transparency” has been a major obstacle, discouraging privacy-focused institutions in traditional finance from investing in the “$50 billion” decentralized finance (DeFi) market.

Slava Demchuk, CEO of blockchain analytics firm AMLBot, said tools like Hinkal’s invisible wallet can raise the bar for personal security by shielding wallet balances and transaction histories from opportunistic attackers.

“For high-net-worth holders, that additional layer of privacy reduces the risk of targeted hacks, phishing attempts, or even physical threats,” Demchuk told Cryptonews, adding:

“Of course, as with any system, ultimate protection depends on adoption, decentralization, robustness of the cryptography behind it, and, most importantly, on users’ own caution.”

Invisible wallets, like Hinkal’s, act as cloaking devices. Transactions can still be validated on-chain, but sensitive details, such as wallet addresses, amounts, or counterparties, remain hidden from public scrutiny, experts say.

Yury Serov, head of investigations at analytics firm Global Ledger, lauded the privacy wallet for removing the most obvious exposure points, namely the appearance of a public address in swaps, lending and routine DeFi use.

But this “invisible” must not be conflated with “invulnerable.” For example, he says, if someone moves unusually large amounts when the liquidity pool is thin, bad actors may easily correlate deposits and withdrawals.

“Timing patterns, transaction sizes, and even metadata from relayers can give away more than users expect,” Serov tells Cryptonews, adding:

“In practice, this means Hinkal makes it much harder for casual observers or opportunistic attackers to track big wallets, but it won’t make a whale completely disappear from a determined investigation.”

According to Serov, Hinkal’s Invisible Wallet “is best viewed as a layer of risk reduction, not a silver bullet.”

Can Privacy and Compliance Coexist?

Hinkal insists that its wallet can be both private and compliant at the same time. Experts aren’t so sure. According to AMLBot CEO Demchuk, it is technically feasible for the wallet to comply with the rules while private.

“Yes, users do pass KYC requirements, and zero-knowledge (ZK) proofs allow them to demonstrate eligibility without exposing personal data,” he noted. “However, from a legal standpoint, it’s not entirely compliant yet.”

Under the European Union’s General Data Protection Regulation, or GDPR, service providers may still be required to act as data controllers, creating “a gap between technical compliance and regulatory obligations,” he said.

The blockchain analyst brought up PureFi as an alternative framework that verifies compliance checks on-chain while ensuring that service providers retain the role of data controller.

“So, while Hinkal’s approach is innovative, there are still open questions about full regulatory alignment,” said Demchuk.

Global Ledger’s Serov concurred with Demchuk, saying that with ZK proofs, users can prove they have already passed (know your customer) KYC verification with a regulated exchange or that they are not on the sanctions list, to participate.

He explains:

“Historically, regulators and policymakers have sometimes seen privacy as being in direct opposition to financial crime compliance. But today, technological advances are moving so quickly that it may no longer be necessary to sacrifice one goal to achieve the other.”

But not everyone is entirely convinced. Didier Lavallée, CEO of Canadian crypto firm Tetra Trust, says Hinkal’s compliance model is “unclear”.

“You would need some kind of token or verification system to confirm it is compliant,” Lavallée told Cryptonews. Still, the service might be useful for institutions that continue to use permissioned blockchains, he said.

Vitalik Wants Privacy Wired Into the Blockchain

Vitalik Buterin has occasionally revisited the question of privacy in his blogs. He usually breaks down the “moon math” that is required to code privacy protocols such as zero-knowledge proofs into Ethereum.

His simple solution is to wire privacy into the blockchain itself rather than add it on top of the blockchain in the form of a wallet, for example.

“Up until now, making private transfers on Ethereum has required users to explicitly download and use a ‘privacy wallet’, such as Railway (or Umbra for stealth addresses),” Buterin explains in one blog entry.

“This adds great inconvenience and reduces the number of people who are willing to make private transfers. The solution is that private transfers need to be integrated directly into wallets.”

One of his proposed implementations would have wallets store a portion of a user’s assets as a “private balance” in a privacy pool.

“When a user makes a transfer, it would automatically withdraw from the privacy pool first,” says Buterin. “If a user needs to receive funds, the wallet could automatically generate a stealth address.”

Invisible Wallet: Transparency vs. Privacy

Hinkal’s privacy tool challenges crypto’s core ethos of transparency. After all, blockchain was built to let “everyone see everything.” However, some crypto analysts argue the wallet reframes crypto transparency rather than ends it.

“Instead of putting every detail of a user’s balance and trades on-chain, it uses zero-knowledge proofs to make only the necessary facts verifiable,” said Serov, the Global Ledger head of investigations, adding:

“In other words, it tries to preserve the trustless auditability of crypto while reducing the personal exposure that comes with full transparency. Hinkal reflects a shift from ‘everyone sees everything’ to ‘everyone can verify what matters.’”

AMLBot’s Demchuk spoke about balancing transparency with privacy. “Transparency has always been core to blockchain, but privacy is equally fundamental, especially when financial security is at stake,” he detailed.

“Public ledgers can remain auditable, while individual users gain choice over what information they reveal.”

Meanwhile, Hinkal could face much bigger problems. Privacy tools have historically drawn sharp reactions from regulators.

In 2022, for example, the U.S. Treasury Department sanctioned Ethereum-based mixing service Tornado Cash on allegations of facilitating billions in laundered funds. Its cofounder, Roman Storm, was indicted in the U.S. for money laundering.

“There are some legitimate use cases of the (Hinkal) app, like payroll or protection from dusting attacks,” Serov noted. “But this innovation is likely to attract regulators’ attention in advanced regulatory regimes, like the EU.”

Without a MiCA license, or Markets in Crypto Assets Regulation, Hinkal will not be able to offer its privacy-enhanced crypto custody solution in the European Union, according to Serov.

“Under the new AMLR, crypto asset services providers will not be allowed to facilitate transactions with privacy coins or anonymous accounts from July 2027. Such privacy-enhancing solutions will be effectively outlawed.”

Analysts say Hinkal’s wallet will likely be pushed out into jurisdictions that don’t yet have similar regulations in place.

“Unlike mixers, which anonymize flows without checks, Hinkal integrates privacy-preserving KYC and access tokens,” said Demchuk. “That gives regulators a framework to distinguish it from ‘black box’ laundering tools.”

Data from Global Ledger shows that Tornado Cash received roughly $1.5 billion worth of ETH between Jan. 1 and Sept. 5 this year (see image above).

Serov said around 36% of the funds are “high-risk” and come from hacks, such as the Cork Protocol hack and Bybit hack, as well as sanctioned entities like Garantex and other risky sources. “The mixer poses significant AML risks,” he added.

Ethereum co-founder Vitalik Buterin claims it is a “bad idea” to use artificial intelligence (AI) for governance. In an X post on Saturday, Buterin wrote:

“If you use an AI to allocate funding for contributions, people WILL put a jailbreak plus “gimme all the money” in as many places as they can.”

Why AI governance is flawed

Buterin’s post was a response to Eito Miyamura, co-founder and CEO of EdisonWatch, an AI data governance platchorm who revealed a fatal flaw in ChatGPT. In a post on Friday, Miyamura wrote that the addition of full support for MCP (Model Context Protocol) tools on ChatGPT has made the AI agent susceptible to exploitation.

The update, which came into effect on Wednesday, allows ChatGPT to connect and read data from several apps, including Gmail, Calendar, and Notion.

Miyamura noted that with just an email address, the update has made it possible to “exfiltrate all your private information.” Miscreants can gain access to your data in three simple steps, Miyamura explained:

First, the attackers send a malicious calendar invite with a jailbreak prompt to the intended victim. A jailbreak prompt refers to code that allows an attacker to remove restrictions and gain administrative access.

Miyamura noted that the victim does not have to accept the attacker’s malicious invite for the data leak to take place.

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The second step involves waiting for the intended victim to seek ChatGPT’s help to prepare for their day. Finally, once ChatGPT reads the jailbroken calendar invite, it gets compromised—the attacker can completely hijack the AI tool, make it search the victim’s private emails, and send the data to the attacker’s email.

Buterin’s alternative

Buterin suggests using the info finance approach to AI governance. The info finance approach consists of an open market where different developers can contribute their models. The market has a spot-check mechanism for such models, which can be triggered by anyone and evaluated by a human jury, Buterin wrote.

In a separate post, Buterin explained that the individual human jurors will be aided by large language models (LLMs).

According to Buterin, this type of ‘institution design’ approach is “inherently more robust.” This is because it offers model diversity in real time and creates incentives for both model developers and external speculators to police and correct for issues.

While many are excited at the prospect of having “AI as a governor,” Buterin warned:

“I think doing this is risky both for traditional AI safety reasons and for near-term “this will create a big value-destructive splat” reasons.”

Mentioned in this article

Cardano’s founder, Charles Hoskinson, has clarified why the blockchain platform was excluded from a prominent US government initiative meant to publish official economic data on public blockchains. Blockchain networks like Ethereum, Solana, Avalanche, and Optimism made the cut; Cardano didn’t. Hoskinson revealed during a YouTube AMA that the reason wasn’t technical or regulatory, but it was grounded in economics. Specifically, he said the integration fee quoted by Oracle specialist Chainlink was absurd, which made Cardano’s participation really unfeasible.

Chainlink’s Absurd Fee

As one of the biggest blockchain ecosystems, Cardano’s inability to participate in the US government’s recent blockchain initiative to bring macroeconomic data onto the blockchain took many crypto participants by surprise. However, while speaking at a recent surprise AMA on his YouTube channel, Cardano founder Charles Hoskinson says the reason boils down to money. 

Related Reading

According to Hoskinson, the main reason was due to its pending partnership with Chainlink’s oracle integration, which is yet to be finalised because of the absurd fee charged by Chainlink. Hoskinson did not shy away from strong language: “They gave us an absurd number for integration. I said ‘f– it, we’ll handle it. We’ll figure it out,’” he said.

Despite the frustration, he tempered his critique with respect. He described Chainlink co-founder Sergey Nazarov as “extremely smart” and “a very good businessman”, someone who “sees the future” and, in Hoskinson’s words, is “sitting on a golden egg”. 

Chainlink’s oracle solutions are very important for connecting smart contracts to real-world data. As such, Hoskinson’s metaphor acknowledges Chainlink’s powerful position in the blockchain ecosystem. 

How It Stalls Cardano’s DeFi Growth

Without a cost-effective oracle integration, Cardano’s decentralized finance landscape has struggled to keep pace with other blockchain ecosystems. To put this into perspective, Ethereum’s integration with Chainlink has allowed large inflows into its DeFi ecosystem, with about $13.4 billion in Total Value Locked (TVL) added from between August 2 ($78.222 billion) and August 31 ($91.595 billion), according to data from DeFiLlama.

Related Reading

Meanwhile, Cardano’s TVL broke below $400 million in August, and daily active addresses have also fallen massively. At the time of writing, Cardano’s TVL is sitting at $367.91 million. The result is a disconnect between Cardano’s on-chain activity and ADA’s price action, which witnessed a steady increase in August alongside the rest of the crypto market.

Nonetheless, Hoskinson is still optimistic. Talks with Chainlink are ongoing, and he’s determined to find common ground with Chainlink. He also revealed discussions with the team behind the USD1 stablecoin and hinted at potential collaboration with Aave, which he described as part of a bundle. If USD1 (already launched on Ethereum, BNB, and Tron) comes to Cardano, it could become the ecosystem’s largest stablecoin. Combine that with oracle access and lending support from Chainlink, and Cardano could strengthen its DeFi foundations significantly.

At the time of writing, Cardano is trading at $0.8307, up by 1.1% in the past 24 hours.

Featured image from Adobe Stock, chart from Tradingview.com

President Donald Trump issued a debanking executive order this week aimed at stopping what his administration described as unfair banking discrimination toward the crypto sector.

Will the order be the definitive blow to the so-called Operation Choke Point 2.0? Will banks that debanked crypto companies unfairly be forced to reinstate them? Custodia Bank founder and CEO Caitlin Long dives into the finer points of the order:

Debanking executive order installs independent overseer

The first “hidden gem,” according to Long, is that Trump’s debanking executive order installs an independent overseer, highlighting the administration’s reservations with the existing three federal banking regulators, the FDIC, the Federal Reserve (Fed), and the Office of the Comptroller of the Currency (OCC).

Instead, it places the Small Business Administration (SBA), a non-bank regulator, as an independent overseer above these agencies to monitor debanking issues. This looks an awful lot like a lack of faith in existing agencies’ willingness or ability to address political and unfair debanking practices.

The SBA’s leader is a long-time Bitcoiner, Kelly Loeffler

President Trump picked Kelly Loeffler, a former senator, business executive, and known supporter of Bitcoin and the broader crypto industry, to lead the SBA. This appointment speaks volumes in the crypto community, as Loeffler was the CEO of Bakkt, an institutional bitcoin futures platform, before her Senate career.

The decision to place her in charge of monitoring debanking is an indication that this administration is serious about reform and that its trust in the previous regulatory agencies is low.

Political leanings inside the banking agencies

Long highlights the political leanings of staff at agencies like the Fed and FDIC. According to contribution records, a large majority of donations from Fed and FDIC staff went to Democratic candidates in recent elections, with Long placing the figure as high as 92% for Democrats in 2024.

This raises concerns for some that regulatory actions may have been driven by partisan biases, especially given the history of crypto-related “debanking” during the Biden administration.

Definition and scope of ‘politicized or unlawful debanking’

Trump’s debanking executive order defines “politicized/unlawful debanking” broadly, focusing on “lawful business activities” rather than naming crypto or any specific sector. This language means banks can no longer refuse service simply because a business is a crypto firm if it is otherwise in compliance. The order targets not just crypto companies, but any lawful firms that may face political discrimination. As Long points out:

“Banks that refused to serve or debanked lawful crypto companies are on the hook.”

The litmus test: Custodia and other crypto banks

Custodia Bank previously faced debanking after regulators pressured multiple banks to cut ties due to their crypto business, even though the bank had a clean compliance record.

Long asserts that the true test of Trump’s debanking executive order will be whether banks that debanked Custodia (and similar crypto firms) are compelled to reinstate them. The order’s success, then, will be measured by real outcomes in banking access for crypto companies.

“If they reinstate us, then the EO succeeded”

Mentioned in this article

The former CEO of the crypto titan Binance is reportedly taking action to terminate the lawsuit filed by the bankruptcy estate of the collapsed digital asset exchange FTX.

In November, the FTX trust and FTX Digital Markets filed a suit against Binance, the exchange’s co-founder Changpeng Zhao and several other executives over a July 2021 share repurchase deal with FTX founder Sam Bankman-Fried.

Bloomberg reports that Zhao is now asking the US Bankruptcy Court for the District of Delaware to dismiss the claims seeking to claw back $1.76 billion that the trust and FTX Digital Markets say were improperly transferred by Bankman-Fried.

In a motion to dismiss filed on Monday, Zhao says the court does not have personal jurisdiction over him because of improper and ineffective service.

The motion argues that Zhao is a resident of the United Arab Emirates and, under the bankruptcy law, serving US counsel on a foreign defendant is improper and invalidates the complaint.

“The claims are so far removed from Delaware, and even the United States, that the statutes at issue, which lack extraterritorial application, do not even apply.”

The filing also says that the bankruptcy law does not definitively extend to foreign transfers, but the trust and FTX Digital Markets improperly attempt to extend their fraudulent transfer claims abroad.

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BitMEX co-founder Arthur Hayes is unloading his altcoin positions, believing that the crypto market will witness a correction this month.

In a new post on the social media platform X, blockchain tracking firm Lookonchain spotted Hayes selling millions of dollars worth of Ethereum (ETH) as well as the memecoin Pepe (PEPE) and the stablecoin-focused project Ethena (ENA).

“Arthur Hayes sold 2,373 ETH ($8.32 million), 7.76M ENA ($4.62 million) and 38.86 billion PEPE( $414,700)…”

The crypto veteran says he’s selling his altcoins because he believes that Q3 will be a period of sluggish economic growth. Hayes believes monetary policies are not loose enough to stimulate the economy, especially with Trump’s tariffs on the horizon.

According to Hayes, macroconditions are ripe to trigger significant retracements for Bitcoin (BTC) and Ethereum.

“Why? US Tariff bill coming due in 3Q … at least the market believes that after NFP (non-farm payroll) print. No major economy is creating enough credit fast enough to boost nominal GDP. So BTC tests $100,000, ETH tests $3,000.”

Despite his short-term bearish stance on crypto, Hayes believes that the asset class is still in a strong uptrend

Late last month, he unveiled his year-end price targets for Bitcoin and Ethereum.

“My year-end targets:

Bitcoin = $250,000.

Ether = $10,000.”

At time of writing, Bitcoin is trading for $113,197, while ETH is worth $3,420.

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Cardano founder Charles Hoskinson has intensified the ecosystem’s push into regulated, privacy-preserving digital dollars, declaring on July 31 that “Moneta’s USDM is becoming the most advanced stablecoin ever built.” The remark, posted on X, came in the wake of a multi-day workshop in Buenos Aires that he said was “making progress on the first Private Stablecoin.”

Hoskinson’s endorsement dovetailed with a dense technical thread from Cardano developer Andrew Westberg that sketched how a privacy-enabled dollar could satisfy enterprise and legal requirements without turning public ledgers into open books. “The stablecoin is a small but important piece of the discussion in Argentina. That being said, the complexity is 10x to 20x that of USDM,” he wrote.

Why Cardano’s USDM Is A Next-Gen Stablecoin

Westberg walked the community through a role-based access model that would let a payroll recipient see only their own payment, an accountant see amounts without personal details, a CFO view the whole, and a court-ordered investigator gain full transparency during discovery. “Really cool tech, but it is a cambrian explosion of complexity to build out something where blockchain can truly eclipse and replace tradfi systems for the first time,” Westberg said.

Those comments follow months of public positioning by Input Output Global’s partner-chain Midnight, a zero-knowledge (“rational privacy”) network designed to let developers program selective disclosure and meet regulatory obligations while shielding counterparties and amounts. Midnight describes its approach as “programmable data protection” for enterprise-grade applications, with smart contracts written in a TypeScript-based language called Compact.

What Hoskinson hailed and what Westberg described are two closely related tracks. On Cardano’s base layer, Moneta Digital LLC issues USDM as a fiat-backed, regulated stablecoin. Moneta identifies itself as a US Money Services Business regulated at the federal level by FinCEN and relevant state authorities, and says reserves are held in bank deposits and money market funds managed by Fidelity and Western Asset Management.

Moneta also opened retail minting with a $1,000 minimum, a stated $0 minting fee, and availability in 19 US states, reflecting the incremental nature of state licensing. As of press time, DeFiLlama shows roughly $12 million USDM in circulation on Cardano.

In parallel, a privacy-preserving instrument is being built for Midnight. An X account branded “ShieldUSD” describes itself as a “fiat-backed privacy stablecoin on @MidnightNtwrk … issued by Moneta Digital LLC @USDMOfficial [and] built by @W3iSoftware,” the development studio where Westberg serves as CTO. While branding and final product details remain in flux, the direction is clear: a fiat-backed dollar with granular permissions that lives natively on a privacy chain and interoperates with public ledgers.

The core design debate—sparked by Westberg’s thread and community replies—turns on whether such complexity is overkill relative to today’s public stablecoins or the prerequisite for real-world finance to migrate on-chain. One respondent argued that USDC would be a “better fit” and that use cases for privacy coins without “government level integrations” are limited. Westberg countered bluntly: “Usdc is not capable of any of the above requirements. Everything it does is public.” He pointed to use cases beyond enterprise payroll—such as paying a public utility where the payer’s identity remains private while the public dataset is anonymized, or compliant remittances that disclose to a verifier only that the receiver is not in a sanctioned country.

Crucially, the privacy layer appears scoped to Midnight. Westberg and subsequent coverage have noted that once assets move off Midnight to public chains, users “lose the privacy,” even if the instrument remains interoperable with other stablecoins for liquidity or settlement. That trade-off—private by default where needed, public when bridged—tracks with Midnight’s own “selective disclosure” model and may reassure regulators that investigatory access can be granted “with a court order,” as Westberg’s payroll example emphasized.

Hoskinson’s choice of Buenos Aires as a backdrop is not incidental. Argentina has been a recurring stage for Cardano’s governance and adoption rhetoric, and for Hoskinson’s advocacy of “private money” that mimics the transactional privacy of cash while remaining auditable under law. The Buenos Aires workshop, framed by him as a milestone on the path to a “first Private Stablecoin,” underscores a push to marry compliance and confidentiality in a jurisdiction where inflation and dollarization have made stablecoins part of everyday economic life.

For Moneta and Cardano, the near-term milestones are prosaic but vital: expanding licensed jurisdictions, growing USDM’s fiat reserves and on-chain supply, integrating with Cardano DeFi venues, and, if the Midnight instrument launches as envisioned, proving that programmable privacy can slot into familiar workflows—payroll, bill payment, remittances—without recreating shadow banking on a blockchain. The longer-term test is market acceptance. USDM’s circulating supply—still modest relative to incumbents—will need to scale, and the privacy variant will need to demonstrate that role-based visibility and regulator-friendly access controls can survive contact with real compliance departments.

For now, the public signal from Cardano’s founder is unequivocal. “Moneta’s USDM is becoming the most advanced stablecoin ever built,” he wrote. The rest of the ecosystem—developers, enterprises, regulators, and users—will determine whether the architecture emerging on Midnight and Cardano can earn that superlative in production rather than in principle.

At press time, Cardano (ADA) traded at $0.72.

Featured image created with DALL.E, chart from TradingView.com

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