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Hackers Moved $500K Stolen Funds To Tornado Cash Undermining The Ban

Hackers Moved $500K Stolen Funds To Tornado Cash Undermining The Ban

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Hackers are still using Tornado Cash, a previously sanctioned crypto mixing app that added anonymity to crypto funds for privacy reasons. Two blockchain security and research companies, Peckshield and Certik have detected a transfer of stolen funds from the DAI Maker exploit that took place in August 2021 and lost more than $7 million in funds in ERC20 tokens and other stablecoins.

According to Certik’s announcement, on September 8, 500,000 DAI tokens were sent to the banned Ethereum mixer service Tornado, which were linked to the victim defi project DAO Maker, which promotes cryptographic crowdfunding.

Related reading: Why Dogecoin Creator Accuses Mark Cuban of Scamming Investors

CertiK, an analytical company operating in the chain added;

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

Although the Ethereum mixer app came under the radar several times for facilitating illegal money transfers, the crypto-mixing service was banned on August 8 by the Treasury Department’s Office of Foreign Assets Control (OFAC). At the time of the seizure, the agency accused the app of helping the North Korean hacking group Lazarus launder more than $7 billion.

In particular, since OFAC restricted the application to open public code, the crypto community has received criticism. The crypto service platforms touted their power to impose sanctions over a government agency on a privacy tool that other legitimate users also use to protect their privacy.

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

The affected users sued the Ministry of Finance over its Tornado Cash Ban

In response to OFAC’s aggressive approach, six legitimate users who were seriously affected by the ban filed a lawsuit against Treasury officials last Thursday. And major cryptocurrency exchange Coinbase has announced its support for this case. In the 20-page complaint, the plaintiffs argued that OFAC violated the Constitution’s freedom of speech and property, and wanted the court to overturn that ban as soon as possible.

Paul Agrawal, a lawyer for Coinbase, commented that the government’s decision stopped the privacy of many legitimate users. He said,

“No one wants criminals to use crypto-protocols, but blocking the technology entirely (which this sanction effectively does) is not the mandate of the people’s elected representatives — especially when there are effective ways to more narrowly target the bad actors.”

Related reading: Sanctioned Tornado Cash users sue US Treasury

Contrary to the company’s claims, exploiters of the June 2022 Horizon Bridge attack used the same application to obfuscate transactions. The hackers sent batches of 100 ETH to the Tornado mixer every 8 minutes, according to Peckshield’s findings in June. It’s more likely that Tornado Cash helped other cybercriminals launder money, including the Grim Finance exploiters who moved $3.3 million into a mixer in December 2021, and the Monox Financial heist where $2.1 million was mixed using a cryptographic privacy tool last September.

Featured image from Pixabay and chart from TradingView.com



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