The hacker who hacked Tornado Cash laundered $900 thousand

The hacker who took control of Tornado Cash gave up control of this protocol. But used it to disguise the funds withdrawn in the attack

The hacker who seized control of cryptomixer Tornado Cash gave up control of the service. But he used the protocol to launder digital tokens from the attack. That’s what Bloomberg writes, citing data from research firm Nansen.

The Tornado Cash project was attacked on the morning of May 20. The attacker was able to gain full control of the cryptomixer’s control. He issued 483,000 native tokens of the TORN protocol. And that gave him a majority vote in the control system.

On May 26, the hacker offered to call off his attack and return control to the Tornado Cash community. But while the protocol was under his control, he exchanged most of his tokens for Ethereum coins. And then laundered about $900,000 in them through Tornado Cash.

Our experts note that the price of TORN was around $6.4 before the hack. By May 29, it was down to $4. According to CoinMarketCap, the token has fallen in price by 37% since the hack, and by 10% in the last 24 hours.

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Coinbase upheld lawsuit against Tornado Cash cryptomixer ban

A group of plaintiffs in a case to lift sanctions imposed by U.S. authorities on cryptomixer Tornado Cash has filed a motion for summary judgment

Cryptocurrency exchange Coinbase has upheld a lawsuit against the Tornado Cash cryptomixer ban. On April 5, a group of individuals filed a motion for summary judgment in the case against the U.S. Treasury Department to lift sanctions on the cryptocurrency protocol.

On August 8, the U.S. Treasury Department imposed sanctions against Tornado Cash. The agency’s OFAC division put the cryptocurrency protocol and related digital wallet addresses on the sanctions list (SDN). According to U.S. authorities, more than $7 billion in illicit cryptocurrency proceeds have been laundered through this mixing service since its inception in 2019.

In September, 6 people, including Coinbase exchange representatives Tyler Almeida and Nate Welch, appealed OFAC decision. In their view, the agency exceeded its authority. And its actions violate the first amendment of the U.S. Constitution on freedom of speech. The defendants in the suit are the U.S. Treasury Department, its head Janet Yellen, OFAC and its head Andrea Gaki.

Coinbase General Counsel Paul Grewal wrote that the plaintiffs filed a motion for summary judgment in part. In which they asked the court to “open Tornado Cash to all.” If the motion is granted, the judge will rule on some of the factual issues, leaving others for trial.

Grewal noted that the citizens who appealed “are among the thousands of law-abiding Americans Who want to protect their privacy but cannot do so because of government sanctions.”

A Coinbase lawyer recalled the plaintiffs’ arguments. They argue that the government cannot sanction Tornado Cash. That’s because it’s not a fore…-cryptomixer-ban/ign national or legal entity, it’s software. He also noted that the government can only legally sanction property, which the Tornado Cash code is not.

Our experts note that the rate of the token Tronado Cash (TORN) rose 14% after the news of the petition. The cryptocurrency’s value rose from $6.95 to $7.95

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ChipMixer cryptomixer was closed down by FBI and Europol

FBI and Europol disabled infrastructure of the ChipMixer platform. Bitcoins worth €44 million, servers and 7TB of data were confiscated

The FBI, Europol and law enforcement agencies of several European countries stopped the operation of the cryptocurrency mixing service ChipMixer. They also confiscated €44 million worth of Bitcoins, the EU police service said. German and U.S. authorities, supported by intelligence agencies in Belgium, Poland and Switzerland, have disabled platform infrastructure.

Four servers, 7TB of data and 1.9 thousand BTC (€44.2 million) were confiscated during the operation. The platform’s website is also no longer operational, and when you go to it, it is reported that the domain was seized by the FBI by order of a U.S. court.

Cryptomixers are blockchain services that increase the confidentiality of transactions by hiding the connection between the source and the recipient of the tokens.

According to Europol, ChipMixer, a service created in mid-2017 to anonymize BTC flows, offered complete anonymity to its customers. Law enforcement authorities speculate that the cryptomixer was involved in money laundering and allowed users to hide traces of crimes. Such as drug or weapons trafficking, ransomware attacks and fraud. The platform is believed to have laundered 152,000 BTC (about €2.73 billion).

Cryptomixing services are under close scrutiny by intelligence agencies. This is because they are often used by fraudsters, and many hackers send stolen digital assets to them after hacks to cover their tracks.

Our experts note that in August 2022, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions on Tornado Cash, the most famous cryptomixer. Which works on the Ethereum blockchain. For conducting money laundering operations through it by hackers from North Korea.

Also in August, alleged Tornado Cash developer Alexei Pertsev was arrested. He is still in custody awaiting trial. Cryptomixer itself was not shut down and continues to operate.

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Ethereum validators started rejecting most Tornado Cash transactions

Tornado Cash is under attack again. Most MEV bots do not handle addresses of this service.

Ethereum validators have begun rejecting most transactions related to the Tornado Cash service. As well as addresses on the U.S. Office of Foreign Assets Control (OFAC) sanctions list. So according to the MEV Watch tool from blockchain company Labrys. About 52% of blocks on the Ethereum network are validated through MEV bots that comply with U.S. sanctions. Another 6% of validators use bots that do not enforce sanctions. And about 42% of nodes on the network do not use such programs.

MEV bots are centralized software designed to extract maximum extractable value (MEV). Such software has become popular among validators because it efficiently selects those transactions that can generate the most profit.

MEV Watch shows which bots have been adhering to OFAC sanctions since Ethereum switched to Proof-of-Stake. These bots “discard” blocks with transactions associated with sub-sanctioned addresses. And this leads to an inability to put these transactions into the blockchain, no matter how high the fee would be.

According to platform data, there are currently 7 popular MEV bots. They are: Flashbots, BloXroute Max Profit, BloXroute Ethical, BloXroute Regulated, BlockNative, Manifold and Eden. Of those, only 3 do not censor transactions as required by OFAC. They are: BloXroute Max Profit, BloxRoute Ethical and Manifold.

Remember that on August 8, the U.S. Treasury Department published an update to the sanctions list (SDN). They included Tornado Cash cryptocurrency protocol and associated digital wallet addresses. The reason for blocking was that this service is used by hackers to launder illicit proceeds.

The attack on confidential Tornado Cash service continues. Our experts believe that in the near future the pressure on this service will only grow. We hope that they will be able to withstand all these blows.



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