Hackers launder $49.3m in Ethereum through tornado cash, fueling market decline

In the first week of September, four hackers laundered $49.3 million worth of Ethereum using the controversial crypto mixer Tornado Cash.

These hackers were responsible for recent high-profile attacks on the crypto exchange Wazir X, DeFi protocols Penpie and LiFi, and crypto entrepreneur Bo Shen.

The laundered funds, totaling 20,561 ETH, were funneled through Tornado Cash, a service that has faced significant criticism and was banned in the U.S. due to its frequent use by bad actors.

On-chain data revealed that the laundering activity took place between September 1 and 7, 2024.

The movement of such large amounts of Ethereum through Tornado Cash has contributed to a decline in the price of the cryptocurrency, which fell below $2,200. Over the first week of September, Ethereum saw a 13% drop, making it the 18th worst-performing asset during that period.

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Each hacker employed different strategies for laundering their stolen Ethereum. The Penpie hacker, who stole 11,261.2 ETH worth $26.72 million, laundered all the assets in a single transaction through Tornado Cash, signaling clear intent not to return the stolen funds.

In contrast, the Wazir X hacker, who stole $230 million worth of ERC-20 tokens from India’s largest crypto exchange, has taken a more gradual approach, possibly due to the sheer size of the stolen assets.

The Penpie team has responded by offering a 10% bounty to anyone who can help recover the stolen funds. Meanwhile, the Wazir X team has also placed a similar bounty on their stolen assets, hoping to enlist the help of white hat hackers.

The ongoing use of Tornado Cash by hackers continues to highlight the challenges faced by regulators and the crypto industry in curbing illicit activities.

Despite the U.S. ban on the crypto mixer, Tornado Cash has reportedly processed up to $1.8 billion in transactions in the first half of the year alone, underscoring the ineffectiveness of current enforcement measures.