As a seasoned analyst with over two decades of experience in the financial sector, I’ve witnessed the evolution of money laundering techniques, from traditional methods to the digital age. The recent findings about Tornado Cash are concerning, to say the least.
Over sixty percent of Ethereum (ETH) deposits made to Tornado Cash in the year 2024 were traced back to potentially risky origins, such as accounts associated with significant cryptocurrency breaches.
Based on information from the Global Ledger report that was disclosed to crypto news outlets, it’s estimated that approximately $552 million worth of cryptocurrencies stolen were laundered using the cryptocurrency blending service Tornado Cash between January 1st and November 27th.
During this timeframe, Tornado Cash amassed a grand sum of approximately 457,768 Ether, equating to roughly $1.64 billion at present values. Most of these funds originated from high-risk sources, with more than half, or about 56%, being traced back to crypto heists that transpired in the years 2023 and 2024.
This is a noticeable jump from 2023, when Tornado Cash handled 314,740 ETH in withdrawals.
In July, the WazirX hack accounted for the most significant contribution of the year, as the hacker transferred approximately $217.2 million worth of Ethereum (61,698 ETH) using a tumbling service.
In March of this year, a sum equivalent to approximately $189.1 million in Ethereum (52,281 ETH), which had been stolen from the Heco Bridge hack back in 2023, was laundered.
In a similar fashion, funds from the Poloniex hack amounting to 18,874 ETH (equivalent to approximately $68.4 million) were traced passing through Tornado Cash. On the other hand, about 12,930 ETH ($46.8 million) that surfaced was linked back to an exploit on Orbit Chain.
To conclude, the Penpie exploit significantly increased the mixer’s illegal transactions by an additional 11,261 Ether, equivalent to approximately $40.8 million.
In 2022, Tornado Cash was restricted by the U.S. Treasury due to its involvement in aiding money laundering activities. The enforcer claimed that since 2019, this platform had handled more than $7 billion in suspicious funds, including approximately $455 million tied to North Korea’s Lazarus Group.
Lately, a court in the United States decided that the Treasury Department acted beyond its powers when it imposed sanctions on certain unchangeable Tornado Cash contract codes.
The Global Ledger report warned that this ruling creates a “dangerous precedent” that could hinder global efforts to combat financial crime in the crypto space, stating that “bad actors may launder even larger amounts of cryptocurrency” as regulators face challenges enforcing compliance.
The decision could also shake investor confidence and prompt regulators to impose stricter rules, “which could mean legitimate businesses face heightened scrutiny and tighter reporting requirements,” the report added.
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2024-11-28 13:34