- Tornado Cash, a popular crypto mixing service for sending anonymous transactions, has processed over $550 million in crypto in 2023.
- While its withdrawal volume has dropped 77% – 85% after US sanctions, North Korea’s Lazarus Group remains a major user.
- The original Tornado Cash founders currently face criminal charges for creating such a widely used illegal tool.
- Hackers might be shifting to harsher tactics like AI-based phishing and flash loan attacks.
Tornado Cash is one of the oldest, most popular and most notorious crypto-mixing services out there.
This service allows anyone to send and receive money anonymously on the blockchain and has turned out to be a popular choice for crypto cybercriminals.
So much so, that the service got heavily sanctioned by the US government in 2022.
But has that stopped it?
The answer is no. According to a recent report from SlowMist, Tornado Cash is still very much in operation, and has been used to move a whopping $550 million worth of crypto in 2023 alone.
Tornado Cash’s volume and withdrawals in 2023
SlowMist, in a recent tweet, highlighted that Tornado Cash processed withdrawals of about 314,740 ETH, valued at about $818.3 million at current prices.
This shows that Tornado Cash helped users hide the source and destination of more than half a billion dollars of (likely illegal funds), making it painfully difficult for law enforcement to track and seize.
Apparently, things used to be much, much worse.
SlowMist says that Tornado Cash’s withdrawal volume has actually decreased by about 85% from what it used to be, after the US sanctions in the crypto witch hunt that resulted after FTX collapsed in late 2022.
Tornado Cash’s links to North Korea’s Lazarus Group
Tornado Cash’s role in the money laundering ring for the North Korean Lazarus Group was a major factor in the U.S. sanctioning it.
This group, which was also responsible for some of the most well-known hacks and robberies in the cryptocurrency industry, including the $455 million Mt. Gox breach in 2014, the $96 million Harmony Bridge heist in 2022, and the $7.8 million Nomad hack in 2022 is currently one of Tornado Cash’s biggest users.
The Lazarus Group reportedly utilized the Tornado Cash service in April and May 2022 to launder hundreds of millions of dollars in earnings from their hacking spree, according to the US Government.
This case was so serious that in August 2023, the founders of Tornado, Roman Storm, and Roman Semenov were even charged with conspiring to violate sanctions, launder money, and run an unlicensed money-transmitting business.
Just like SlowMist mentioned, a recent report from TRM labs also shows that after the sanctions, the rate at which Tornado was used, declined by as much as 77%.
“[…] while we still see illicit activity passing through Tornado Cash, total illicit volume passing through the mixer has decreased by around 77% post-sanctions.”
Hackers May Now Be Employing Harsher Tactics To Steal Crypto
The sanctions on Tornado have not stopped these illegal crypto-mixing operations by any means.
Other mixing services like Sinbad, Coinomize, Aztec and others are now being heavily used in place of Tornado Cash.
This highlights a growing trend of hackers employing newer and more sophisticated tactics to steal crypto, like AI-based phishing, flash loan attacks, reentrancy, oracle attacks and governance attacks among others.
According to various reports, hackers stole around $2 billion worth of crypto in 2023 across dozens of thefts throughout the year.
And while this figure is significantly lower than the $3.8 billion stolen in 2022, 2024’s hacks are starting to pick up speed.
This shows the persistence and sophistication of web3 hackers and the idea that security issues will always be one of the challenges of the blockchain space.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.