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Proof of Innocence
How Spillways prevents dirty funds to enter the protocol without privacy compromise.
The balance between security, privacy, and compliance is a critical one in the world of decentralized finance (DeFi). Spillways is committed to preserving this balance while ensuring that the integrity and legality of our platform are upheld. Our method of achieving this balance is through a system we've dubbed the "Proof of Innocence."
The Proof of Innocence is a first-of-its-kind system implemented by Spillways to prevent dirty funds (funds obtained illegally) from passing through our mixers. We're here to protect your privacy, not to facilitate or enhance criminal activities. Here's how it works:
When a transaction is initiated on our platform, the Proof of Innocence system makes a global check against several databases to verify the cleanliness of the funds. Our system uses the databases of various industry actors, including:
- 1.Tether Limited: The company behind USDT, a popular stablecoin, maintains a database of blacklisted addresses associated with illegal activities.
- 2.Circle: This Boston-based cryptocurrency firm also has a blacklist of addresses involved in suspicious or illicit activities.
- 3.OFAC (Office of Foreign Assets Control): This department of the U.S. Treasury enforces economic sanctions against foreign states, organizations, and individuals involved in illegal activities. Their list of sanctioned individuals and entities is considered the gold standard in financial compliance.
- 4.ChainAnalysis: A blockchain analysis company that provides data on risky transactions and addresses to help businesses comply with regulations.
The Proof of Innocence system checks all transactions against these blacklists in real-time, preventing tainted funds from entering our ecosystem.
While implementing the Proof of Innocence, our primary goal has been to maintain the privacy of our users. The system doesn't compromise user data, as it only checks transaction sources against known blacklists and doesn't collect any additional information. Our commitment is to provide a secure, private, and compliant platform for users to enjoy DeFi's benefits without aiding illegal activities.
The Proof of Innocence is an integral part of Spillways' commitment to uphold privacy, ensure compliance, and maintain a clean and trustworthy DeFi ecosystem. By innovating proactive measures, we strive to lead by example in the industry, demonstrating that it's possible to achieve high standards of privacy and security without facilitating illegal activities. We believe in creating a DeFi environment where privacy is respected and legality is uncompromised.