Nocturne Labs, an Ethereum-native privacy protocol, has announced the closure of its operations. The company, which was supported by influential cryptocurrency figures, including Ethereum co-founder Vitalik Buterin, made the announcement on June 5 through a post on X.
Although Nocturne Labs did not provide a reason for the shutdown, Cointelegraph has reached out to them for further clarification. Initially, Nocturne Labs aimed to bring private accounts and transactions to the Ethereum ecosystem. In October 2023, the company secured $6 million in a seed funding round led by Bain Capital Crypto and Polychain Capital, with Buterin also participating.
Despite the decision to wind down 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 holds over $129,000 in total value locked (TVL), which has decreased from over $455,000 on Jan. 22 when the shutdown of Nocturne v1 was announced, as per DefiLlama data.
There has been speculation that Nocturne Labs’ closure may be linked to increased regulatory scrutiny on privacy-focused cryptocurrency projects. In a post on Jan. 22, the protocol mentioned the heightened attention on such projects since the United States government blacklisted the crypto mixing protocol Tornado Cash in August 2022. The developer of Tornado Cash, Alexey Pertsev, was convicted of money laundering on May 14, despite the protocol being noncustodial, meaning it does not control or hold funds passing through it.