0xbow raised $3.5 million to grow Privacy Pools, a crypto privacy tool built for compliance on Ethereum. The round arrives just after the Ethereum Foundation's Kohaku wallet integrated Privacy Pools and as the project reports $6 million in activity since its March 2025 launch.
At a glance
- Funding: $3.5M seed led by Starbloom Capital
- Adoption: Integrated in the Ethereum Foundation's Kohaku wallet
- Usage: $6M processed, 1,500+ users, 1,186 withdrawals
- Assets: ETH, wBTC, USDC, USDT, DAI
What 0xbow is building
0xbow's Privacy Pools aims to protect user privacy without hiding crime. It uses smart contracts—self-executing code on a blockchain—to group and shuffle transactions so outside observers can't easily link who paid whom. Unlike old-school "mixers," Privacy Pools lets users prove their funds came from clean sources to meet anti-money-laundering rules.
A key piece is the Association Set Provider (ASP). Think of ASPs like independent referees: they publish sets that help users show they are not connected to flagged funds. ASPs do not hold or move anyone's money, but they help organize the information users need to prove they are transacting responsibly.
Why this matters
Privacy on public blockchains is broken for everyday users—every payment feels like a glass wallet. Regulators, meanwhile, worry that privacy tech can shield bad actors. Privacy Pools tries to bridge that gap with tools that make privacy auditable on demand.
The timing is notable. Earlier this year, a New York jury found Tornado Cash co-creator Roman Storm guilty of conspiracy to run an unlicensed money-transmitting business. That verdict spotlighted the risks around traditional mixers and pushed the industry to explore privacy models that answer law enforcement concerns.
Who backed the round
The seed investment was led by Starbloom Capital, with participation from Coinbase Ventures, BOOST VC, Status Research & Development GmbH, and several angels. 0xbow previously raised a pre-seed round in 2024, which included support from Ethereum co-founder Vitalik Buterin.
Key numbers so far
- Launch: March 2025 on Ethereum
- Volume: $6,000,000 processed
- Users: More than 1,500
- Withdrawals: 1,186 completed
These are early-stage figures, but they show demand for privacy tools that can plug into wallets and apps while staying on the right side of the rules.
How it works, in plain English
Imagine paying at a crowded food court with cash from a shared till. It's tough for someone watching to tell which bill came from which person. Privacy Pools creates a similar effect on-chain by batching deposits and withdrawals.
The difference from older mixers: users can generate proofs that their funds came from an "allowed" crowd while excluding known bad actors. ASPs publish those crowds (or "sets") so that wallets, exchanges, or compliance teams can verify the claims if needed.
What's next for 0xbow
With the new funding, the team plans to add features, expand to more blockchains, and hire engineers. The protocol is live on Ethereum today and supports ETH, wrapped Bitcoin (wBTC), and leading stablecoins USDC, USDT, and DAI.
Risks and open questions
- Who sets the rules? If ASPs become gatekeepers, the industry must ensure they are transparent and accountable.
- Will regulators accept proofs at scale? Policy clarity will determine whether exchanges and payment apps can rely on these attestations.
- User experience: Privacy that requires complex steps won't go mainstream. Wallet integrations like Kohaku are a strong signal, but more are needed.
The bigger picture
DeFi—short for Decentralized Finance—runs on open ledgers where anyone can see transactions. Tools like Privacy Pools aim to make those ledgers usable for normal life, where people expect financial privacy, while still allowing lawful oversight. If this model works, it could set a template for privacy in crypto that both users and regulators can live with.
Bottom line: 0xbow is betting that programmable privacy with verifiable proofs—not opaque mixers—will be the path to mainstream adoption.