Nocturne Labs, an Ethereum-based privacy protocol, has announced the closure of its operations. The company, which had the support of notable cryptocurrency experts, including Ethereum co-founder Vitalik Buterin, made the announcement on June 5 through a post on X.
Nocturne Labs did not provide any reasons for the shutdown. Cointelegraph has reached out to Nocturne Labs for further clarification.
Initially, Nocturne Labs aimed to bring private accounts and transactions to the Ethereum ecosystem. In October 2023, the company raised $6 million in a seed funding round led by Bain Capital Crypto and Polychain Capital, with Buterin also participating.
Despite winding down its operations, users will still be able to make withdrawals through the Nocturne front end until the end of June. According to the announcement, Nocturne currently has over $129,000 in total value locked (TVL), a decrease from over $455,000 on Jan. 22 when the shutdown of Nocturne v1 was announced, as reported by DefiLlama data.
Speculations have emerged suggesting that Nocturne Labs may be shutting down due to a regulatory crackdown on privacy. In a post on Jan. 22, the protocol mentioned the increased scrutiny that privacy-focused cryptocurrency projects have faced since August 2022, following the blacklisting of the crypto mixing protocol Tornado Cash by the United States government. Alexey Pertsev, the developer of Tornado Cash, was convicted of money laundering on May 14, despite the protocol being noncustodial, meaning that it does not hold or control the funds passing through it.