The sanctioned Tornado Cash has been used by cybercriminals to launder $50 million in stolen cryptocurrency this month.
Blockchain data firm SpotOnChain revealed that bad actors have been using the sanctioned crypto blending service Tornado Cash extensively this month to launder stolen funds.
Tornado Cash, a crypto blending tool that conceals transaction details, continues a preferred platform for cybercriminals intending to obscure illicit funds.
According to a report by SpotOnChain on September 8, four hackers transferred a total of 20,561 ETH (approximately $50 million) through Tornado Cash in September. The funds in question are associated with substantial attacks that have affected Penpie, WazirX, Bo Shen, and LiFi.
The criminal guilty for the Penpie attack transferred 11,261 ETH, valued at about $26.7 million. This quantity represents the complete amount taken from the decentralized finance (DeFi) platform last week.
Penpie granted a 10% bounty, equivalent to approximately $2.7 million, for information that resulted in asset recovery. However, the perpetrator chose to conceal the full amount through Tornado Cash.
Similarly, the attacker behind the WazirX breach moved 7,600 ETH, worth $18.51 million, via the blending service this month. WazirX experienced a $235 million breach in July, which forced the exchange to cease operations.
The criminal continues to possess 54,155 ETH, which is equivalent to approximately $123 million in value, despite laundering a portion of the stolen assets.
Furthermore, during this time, hackers affiliated with Bo Shen and LiFi transferred 1,500 ETH and 200 ETH, respectively, into the sanctioned aggregator, a total of $4 million.
These occurrences suggest that Tornado Cash remains a preferred method for concealing stolen assets, despite efforts to reduce its usage. Although there was a decline in platform activity subsequent to the sanctions, recent data indicates that there has been a resurgence. According to Lookonchain, three hackers had deposited 17,800 ETH into the platform over the course of three days as of September 6. This amount is equivalent to $42.7 million.
In the interim, Josh Lawler, a crypto attorney, has emphasized the potential legal challenges associated with the sanctions imposed on Tornado Cash. He emphasized that the Fifth Circuit Court is hesitant to designate open-source software as a “entity” that is subject to sanctions.
The 5th Circuit is skeptical of the argument that open source software is a “entity,” which may mean that Tornado Cash is beyond the Treasury’s capacity to sanction. Lawler expressed the possibility of obtaining a point in favor of privacy.
This legal discussion arises in the context of the United States government’s criminal prosecution of Roman Semenov and Roman Storm, the co-founders of Tornado Cash. The indictment alleges that they conspired to launder money and facilitated transactions with sanctioned entities.
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