Ethereum cofounder Vitalik Buterin has tested Hinkal’s new “Invisible Wallet,” a privacy tool designed to shield user activity on public blockchains. The test comes at a time when crypto hacks are surging, with August alone recording $163 million in losses, the third consecutive month of rising exploits, according to data from PeckShield.
Hinkal’s Invisible Wallet allows users to hide on-chain activity, aiming to protect high-value holders from targeted hacks, phishing attempts, and other attacks. The system leverages zero-knowledge proofs, enabling privacy-preserving compliance without exposing sensitive details like wallet addresses or transaction histories. In late August, Buterin transferred 0.01 ETH ($44) through the wallet, marking his endorsement of the tool.
A Response to Crypto’s Transparency Problem
Hinkal CEO Giorgi Koreli described crypto’s inherent transparency as a “bug,” arguing that it is not normal for over $4 trillion in blockchain assets to be fully exposed to tracking. He emphasized that privacy wallets can reframe blockchain transparency, giving users control over what information they reveal while keeping transactions verifiable on-chain.
“Privacy-preserving wallets are the future,” Koreli said, adding that open surveillance and monitoring should not be the default for digital assets.
Analysts: Useful, But Not a Silver Bullet
Experts largely welcomed Hinkal’s innovation but warned of its limits. Slava Demchuk, CEO of AMLBot, said invisible wallets can raise the bar for security, particularly for wealthy wallets that are prime targets for cybercriminals. However, he stressed that adoption, decentralization, and user caution remain critical.
Yury Serov of Global Ledger noted that while Hinkal hides obvious exposure points, like wallet addresses, sophisticated attackers can still use transaction sizes, timing, and metadata to trace activity. “It makes it harder for casual observers, but whales won’t disappear from determined investigations,” Serov said.
Compliance and Regulation Uncertain
While Hinkal claims its wallet can be both private and compliant, regulatory alignment is still unclear. Zero-knowledge proofs allow users to prove eligibility (such as passing KYC checks) without revealing personal data. But legal frameworks like Europe’s GDPR and the upcoming MiCA regulations may still require service providers to act as data controllers.
Analysts warn that regulators may view privacy wallets with suspicion, much like they did with Tornado Cash, which was sanctioned in 2022 for allegedly enabling money laundering. Without clear compliance mechanisms, Hinkal may face challenges operating in stricter jurisdictions.
A Step Toward Buterin’s Vision
For years, Buterin has advocated for privacy features to be built directly into Ethereum. While solutions like Hinkal represent progress, he argues that true privacy must be integrated at the blockchain level rather than added later through external tools.
Still, as hacks rise and institutional players weigh entry into DeFi, tools like Hinkal’s Invisible Wallet could play a critical role in balancing transparency, security, and compliance in the next phase of crypto adoption.
