Hacker Shifts $33 Million in Ethereum from WazirX Hack Through Tornado Cash

  • In a recent development, approximately $33 million in cryptocurrency was stolen from the Indian crypto exchange WazirX and is now on the move.
  • The funds were transferred to a new address and subsequently funneled into the coin mixer Tornado Cash.
  • The transfers have been occurring in multiple transactions, with each block consisting of 5,000 ETH, totaling about $33 million over the week.

A detailed analysis of the $33 million crypto heist from WazirX, its implications, and the involvement of Tornado Cash for laundering the stolen funds.

Large-Scale Crypto Theft from WazirX: Unraveling the Details

In a notable incident, around $33 million worth of cryptocurrency was stolen from WazirX, a premier Indian crypto exchange. The hacker responsible has methodically moved these funds across various addresses before eventually funneling them into Tornado Cash, a notorious coin mixer. The security firm Cyvers observed significant transactions of 5,000 ETH blocks, equating to about $12 million at current Ethereum prices. These transactions occurred on Thursday, following earlier movements throughout the week.

The Role of Tornado Cash in Laundering Stolen Crypto Assets

Tornado Cash, an Ethereum-based coin mixer, employs advanced cryptographic tools such as zero-knowledge proofs to obscure user deposits and withdrawals. Despite its legit use case for enhancing privacy, the platform has attracted scrutiny and sanctions from the U.S. Treasury Department, primarily due to its use by criminals and state-sponsored hacking groups. The funds siphoned off from WazirX were eventually moved into Tornado Cash, highlighting the mixer’s continuous use in laundering illicit gains. This raises critical questions about the balance between privacy and regulatory compliance in the crypto space.

Investigative Findings and the Blame Game

In the aftermath of the sizable heist, conflicting narratives have emerged regarding the accountability for the security breach. While WazirX has embarked on a restructuring plan to restore its users’ trust and funds, a blame game has intensified between significant players involved. Binance asserted that it neither owns nor operates WazirX, distancing itself from any involvement in the compromised multisig wallet, whereas Liminal, a crypto custody service, also refuted any association with the breach, contradicting WazirX’s internal investigation results. These conflicting statements have only added to the complexity of uncovering the true culprits behind the breach.

Implications for the Crypto Industry and Legal Ramifications

The involvement of Tornado Cash in these transactions has not only amplified regulatory concerns but also spotlighted the legal ramifications for developers associated with such platforms. The arrest of Tornado Cash co-founder Roman Storm for facilitating money laundering and sanctions violations further underscores the legal perils in the crypto ecosystem. This case, along with the sentencing of his colleague Alexey Pertsev, has sparked a crucial debate within the crypto community on the extent of liability for developers of open-source software aiding in criminal activities.

Conclusion

The WazirX theft showcases the escalating risks and complexities within the cryptocurrency domain. The hacker’s methodical approach to laundering substantial amounts through Tornado Cash signifies the persistent applicability of advanced anonymization tools in illicit activities. As the WazirX narrative unfolds, it’s evident that exchanges, developers, and regulatory bodies need to enhance collaborative efforts to address security lapses and the misuse of privacy-enhancing technologies. Future outlook hinges on striking a delicate balance between privacy, security, and regulatory adherence.

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Source: https://en.coinotag.com/hacker-shifts-33-million-in-ethereum-from-wazirx-hack-through-tornado-cash/