The funding comes after a recent Ethereum integration and $6 million in transactions.
0xbow, a privacy-focused decentralized finance (DeFi) platform, announced on Tuesday that it has closed a $3.5 million seed round to expand Privacy Pools, its compliant crypto privacy technology.
Privacy Pools leverages smart contracts to batch and mix user transactions, obscuring on-chain links while enabling users to demonstrate compliance with anti-money laundering and other legal frameworks. Its Association Set Provider (ASP) system monitors deposits for suspicious activity without holding users’ funds.
The funding comes shortly after the Ethereum Foundation (EF) added Privacy Pools to its Kohaku wallet. Since launching on Ethereum in March 2025, the protocol has processed $6 million in transactions from more than 1,500 users, completing 1,186 withdrawals, the company said in a press release viewed by The Defiant.
The seed round was led by Starbloom Capital and included Coinbase Ventures, BOOST VC, Status Research & Development GmbH, and several angel investors. 0xbow previously raised a pre-seed round in 2024, backed by Ethereum co-founder Vitalik Buterin.
The round highlights growing institutional interest in compliant privacy solutions after years of regulatory uncertainty around crypto mixing services. Earlier this year, for example, the federal trial of Roman Storm, a software developer and co-creator of the crypto privacy tool Tornado Cash, made international headlines as a New York jury deliberated on the legality of such tools.
Ultimately, Storm was found guilty on one criminal charge: conspiracy to operate an unlicensed money-transmitting business. However, many crypto experts were left divided on the verdict, with some claiming that it was a threat to DeFi, and others saying devs must be held accountable for when such tools facilitate crime.
“We’re solving for something the industry hasn’t figured out: how to give people financial privacy without creating a haven for illicit activity,” said Nathaniel Fried, CEO of 0xbow. “You shouldn’t have to choose between privacy and compliance.”
The funding will help 0xbow add more features, expand to other blockchains, and hire engineers. Privacy Pools currently supports ETH, wrapped Bitcoin (wBTC), and major stablecoins like USDC, USDT, and DAI. The protocol is live on Ethereum.
