This highlights ongoing security vulnerabilities and challenges in regulatory oversight within the crypto sector.
On-Chain Data Reveals Crypto Hackers' Transactions
Blockchain analysis indicates that the hackers behind the November theft from Poloniex, involving $117 million, have transferred funds to Tornado Cash in 100 Ethereum (ETH) batches. Notably, these funds, worth about $3.3 million, were inactive for nearly six months before Tuesday's transaction.
Concurrently, the hackers involved in a separate incident at Kronos Research transferred 200 ETH directly to Tornado Cash and about 1,314 ETH (valued at around $4 million) to a new crypto wallet – 0x164. From here, the funds have started moving to Tornado Cash, with the current balance at 314 ETH, approximately $962,000.
This saga commenced with a significant security breach at Taipei-based Kronos Research in November 2023. The incident resulted in a loss of $26 million due to unauthorized access to the firm's API keys.
Tornado Cash, the platform utilized by these hackers, was designed to obscure the origins of crypto assets by blending them across various wallets over time. However, the US Treasury sanctioned the platform in 2022 following its association with Lazarus, a North Korean hacking group. Lazarus used Tornado Cash to launder money from the $615 million Ronin bridge exploit.
The repercussions of using Tornado Cash have been significant. The US Department of Justice (DOJ) has levied several charges against its developers, Roman Storm and Roman Semenov. These include conspiracy to commit money laundering and operating an unlicensed money transmitter.
The DOJ's recent filings argue against dismissing the charges against Storm, emphasizing that a jury should determine the nature of Tornado Cash's services. Furthermore, the DOJ challenges the claim that Tornado Cash was not a money-transmitting business due to a lack of fund control.
“The definition of ‘money transmitting' in Section 1960 does not require the money transmitter to have ‘control' of the funds being transferred. The definition exends to ‘transferring funds on behalf of the public by any and all means,” the DOJ legal team argued.
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