Hackers transferred $500,000 of stolen funds to Tornado Cash, undermining ban | bitcoinist.com

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The previously sanctioned crypto mixing app Tornado Cash, used to increase the anonymity of crypto funds for privacy reasons, is still used by hackers. Two blockchain security and research companies, Shield and Certik, detected the transfer of stolen funds from the DAI Maker exploit that occurred in August 2021 and lost over $7 million in funds in ERC20 tokens and other stablecoins.

According to Certik’s announcement, 500,000 DAI tokens linked to the victim defi project DAO Maker, which facilitates crypto crowdfunding, were sent to the banned Ethereum mixing service Tornado on 08 September.

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The CertiK chain analysis firm added;

“We see a movement of $500,000 DAI to @TornadoCash from EOA 0x0B789. The address is directly linked to the DAOMaker exploiter who stole funds from @TheDaoMaker.

Although the Ethereum mixing app has flown under the radar several times before for facilitating illicit money transfers, the Treasury Department’s Office of Foreign Assets Control (OFAC) banned the crypto mixing service on August 08. . At the time of the confiscation, the agency accused the app of helping North Korean hacker group Lazarus launder more than $7 billion.

Notably, since OFAC restricted the app as open public code, criticism from the crypto community has surfaced. Crypto service platforms touted the government agency as overstepping its authority to impose penalties on a privacy tool also used by other legitimate users to protect their privacy.

DAIUSD
The price of DAI is currently trading around $1. | Source: DAIUSD price chart from TradingView.com

Affected users sued the Treasury Department over its Tornado cash ban

In response to OFAC’s aggressive approach, six legitimate users severely affected by the ban filed a lawsuit against Treasury Department officials last Thursday. And the major cryptocurrency exchange Coinbase has announced that it supports this case. In a 20-page complaint, the plaintiffs claimed OFAC violated constitutional rights to free speech and property and wanted the court to lift that ban as soon as possible.

Paul Agrawal, Coinbase’s chief legal officer, said the government’s decision ended the privacy of many legitimate users. He said,

“Nobody wants criminals to use cryptographic protocols, but completely blocking the technology (which this sanction essentially does) is not what the people’s elected representatives have allowed – especially when there are effective ways to target more bad actors closely.”

Related Reading: Sanctions-Hit Tornado Cash Users Sue US Treasury Department

Contrary to the company’s claim, the exploiters of the June 2022 Horizon Bridge attack used the same app to hide transactions. The hackers sent the 100 ETH batches to the Tornado mixer after 8-minute intervals, according to June findings from Peckshield. Other cybercriminals are more likely to be aided by Tornado Cash to launder money, including Grim Finance exploiters, who funneled $3.3 million into the mixer in December 2021, and the Monox heist finance which saw $2.1 million mixed through a crypto privacy tool last September.

Featured image from Pixabay and chart from TradingView.com



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