In this face pace technological era, the crypto space has witnessed a rapid rise in innovations aimed at improving the privacy and security of crypto users in an enhanced anonymity in transactions. One of such controversial yet effective tools to achieve 100% anonymity is the crypto mixer, which is also known as "tumbler". Tornado Cash is a perfect case in this regard— a service that allows users to mix crypto transactions in order to conceal their identities. This service has substantially taking on a new and unpredicted role as a device for cybercriminals.
For those not in the know, the founders of Tonado Cash are being indicted for money laundering. The two founders of Tornado Cash was charged with laundering more than $1 billion in criminal proceeds in collaboration with North Korean hackers using the platform. This article take a dig into some of the money laundering activities that has been reported against the platform.
Tornado Cash is an Ethereum mixing service that enables users to execute transactions privately. It is a blockchain protocol that achieves this by creating a pool of equal denomination deposits from which withdrawals are made. This perfectly legal service is designed to protect users' privacy by obfuscating the link between the sender and receiver addresses on the Ethereum network which allows enhanced anonymity.
However, recently, Tornado Cash has come under scrutiny as it allegedly turned into a hub for cybercriminals. Its ability to erase transaction trails has made it a favorite amongst cyber felons who exploit this feature to obfuscate ill-gotten wealth's origins. This anonymity provided by Tornado Cash is being misused to launder money, in complete contrast to its initially intended user privacy promotion.
A report by Yahoo finance asserted that in January 2022, Tornado Cash was responsible for mixing 4,600 ETH worth approximately $15 million, which was reportedly stolen from Crypto.com, a Singapore-based exchange. The stolen funds were tracked by security specialists and some sleuths on Twitter which leads to Tonado Cash, a non-custodial Decentralized Finance (DeFi) mixing service where the trail stopped because the transaction history has been obfuscated.
in December, the same year, Tornado Cash served as the hacker point to wash $196 million worth of crypto reportedly stolen from Bitmart, a crypto exchange. Yahoo finance reports. An indication of the high criminal activity chance on this platform.
Furthermore, Tonado Cash was spotted by Chainalysis to be the home of the North Korea
Hacker's group that amassed over $400 million in crypto via cyberattack in 2021.
Moreover, a history of cybercrime activity traced to Tonado Cash further compounds this case. In 2020 alone, there was an eight-fold increase in the number of ransomware attacks, many of which demanded payment in cryptocurrencies, primarily Bitcoin and Ethereum, owing to their relative ease of transacting and perceived anonymity. If the victims send the funds using Ethereum or Bitcoin, the hackers commonly use Tornado Cash to obfuscate the transaction addresses before sending the money to a crypto exchange where they are laundered.
One such notable example is the case of a Twitter hacker who used Crypto mixer to launder 13 Bitcoin. More cases involving rug pull scams, where developers abandoned their projects after raising funds, who then masked their transaction history using the same mixer abound in the internet.
In February 20, this year, a hacker who claimed ownership of the whole genesis protocol made away with $2 million worth of Ethereum on the Hope Finance protocol. The funds was tracked to Tonado Cash where it was successfully laundered.
A more recent case of 13.5K Ethereum, the stolen funds from AnubisDAO rug pull two years ago was seen being washed away on Tonado Cash. The AnubisDAO rug pull happened 2 years ago,](https://decrypt.co/84924/anubisdao-investors-lose-60-million-in-alleged-rug-pull?amp=1) and the scammer finally got to laundered the money using the Tonado Cash Mixer' service between July 15, and 16 this year.
This new trend is alarming considering the detrimental impact it could have on the reputation and acceptance of cryptocurrencies, especially amidst the global push for a comprehensive regulatory framework.
While cryptocurrency tumblers challenges the bedrock principle of blockchain transparency, it's essential to stress that these services are not illegal or unethical themselves. The problem, however, is that they are becoming a tool exploited by cybercriminals, which works against the efforts towards mainstream cryptocurrency adoption.
Several jurisdictions have moved to regulate crypto mixers in the past, and the money laundering charges against Tonado Cash founders Roman Storm and Semonov prompts a renewed focus on strengthening the regulatory environment while striking a delicate balance with user privacy. We might witness an increased push globally to tighten regulatory boundaries, or possibly a ban on crypto mixing services.
In conclusion, while Tornado Cash and similar platforms offer essential services for enhancing user privacy, misuse by cybercriminals continues to pose a critical challenge to the crypto sphere's legitimacy and security. Active measures must be taken to prevent these platforms from becoming hubs for illicit activities, without compromising the inherent advantage they offer for privacy-conscious users.
Therefore, the case with Tornado Cash serves as a stark reminder that while blockchain technology brings a plethora of beneficial applications, it is not devoid of pitfalls that can be exploited for illicit purposes.
Posted Using LeoFinance Alpha
