Is Tornado Cash Illegal? WazirX Hacker Transferred 2500 ETH Tokens

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As a long-time investor and enthusiast of cryptocurrencies, I have always been cautious about the security measures implemented by various platforms. The recent cyberattack on WazirX, India’s largest crypto exchange, has certainly raised some red flags for me. The fact that the hacker managed to move 2500 ETH (approximately $6.5M) to Tornado Cash, an anonymous transaction platform, is concerning.

Following the cyberattack on WazirX, there’s growing curiosity about the next steps for the pilfered cryptocurrencies. Cybersecurity experts in India and Singapore have been vigilantly monitoring the stolen WazirX funds, and most recently, they traced a 2500 ETH transaction from the hacker’s WazirX wallet to Tornado Cash, offering the first clue about the status of the stolen funds.

One of the biggest cryptocurrency platforms, the WazirX exchange, has been under a major cyber attack, stealing more than $235 Million worth of crypto assets, majorly in Ethereum and ERC-20 tokens. The hackers and the method of the hack are still unknown and no crypto has been recovered till now. The biggest update is from Zeittai, as they have filed for Meroratrim in Singapore to work on the restructuring plans. However, this new lead has turned the situation more concerning as the Tornado platform is known for breaking the connection between sender and receiver, making it hard to track the transaction.

Is Tornado Cash Illegal?

Tornado Cash is a system that allows for both deposits and withdrawals using a communal cryptocurrency fund. Its key feature is hiding the details of sender and receiver by mixing transactions together. Users anonymously deposit their crypto into a common pool, breaking the trail of the original transaction. Later, they can withdraw their crypto from this pool, starting a new transaction with a unique transaction code.

In an effort to enhance privacy during cryptocurrency transactions, Tornado was constructed. Unfortunately, malicious individuals exploited this for crypto laundering and concealing their activities. However, authorities took notice of these illicit practices and, in August 2022, the U.S. Office of Assets Control (OFAC) linked Tornado to money laundering and imposed sanctions on the platform, effectively outlawing its use within the United States due to its association with criminal activities related to money laundering.

As a crypto investor, I’ve found myself in a troubling situation. This platform, though popular globally, has been under scrutiny since it’s suspected to have facilitated the laundering of over $7 billion in cryptocurrencies since 2019. Consequently, US citizens like myself or companies within the nation are prohibited from using this platform. Yet, despite these restrictions, its operation continues unabated in various regions around the world. Sadly, this same platform is now being exploited by the WazirX hacker as a means to flee with the pilfered digital assets.

Following the disclosure by Spotonchain – a widely-used analytics service – it was discovered that the thief transferred approximately 2600 ETH (equivalent to $6.54 Million) to Tornado Cash. Furthermore, the platform’s findings showed that the hacker currently controls around 59,156 ETH ($148.8M) distributed across nine separate wallet addresses.

WazirX Hacker Transferred 2500 ETH To Tornado Cash

At a recent gathering on WazirX, Nischal Shetty from Zettai shared their strategy: they contacted over 500 cryptocurrency exchanges in an effort to halt transactions originating from the hacker’s wallets. The aim was to prevent the transfer of the stolen funds and potentially recover them. Unfortunately, it was discovered that the WazirX hacker utilized an unlawful service to move approximately 2500 ETH, equivalent to over $6.5 million dollars.

The #WazirX Exploiter transferred 2,600 $ETH ($6.54M) to #TornadoCash 11 hours ago.
Currently, the hacker still holds 59,156 $ETH ($148.8M) across 9 wallet addresses!
Is a drop in the price of ETH coming up? Keep track by following @spotonchain and setting alerts for Ethereum and WazirX.
— Spot On Chain (@spotonchain) September 3, 2024

Moreover, according to Arkham Intelligence, the hacker executed 26 separate transactions, with each transaction containing 100 ETH. This series of smaller transactions was strategically employed to discreetly transfer the total amount of 2600 ETH without drawing too much attention, as larger transactions tend to be more conspicuous.

Moving funds to this platform could potentially allow the WazirX hacker to escape unchecked with these transactions. On a more serious note, depositing such a large quantity of Ethereum tokens may significantly influence the price of Ether, which is currently trading at approximately $2,500 and facing challenges in the market. Ethereum, the second-largest cryptocurrency, is presently under pressure.

Final Thoughts

Following a significant cyber-attack on India’s largest cryptocurrency exchange, WazirX, the perpetrator has shifted the stolen 2500 ETH tokens to Tornado Cash. The culprit conducted 26 transactions, with each transaction containing 100ETH, in an attempt to conceal its tracks by using this illicit platform. However, due to growing concerns over cryptocurrency laundering, the authorities banned the platform in 2022, preventing US citizens and businesses from engaging with it. This action was taken primarily because of Tornado Cash’s suspected involvement in laundering over $7 billion linked to various crypto frauds, as reported.

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2024-09-03 17:37