Bitcoin Over Tornado Cash: Effective Crypto Laundering Tool for Cybercriminals, Says CertiK
Summary:
Decentralized nature of Bitcoin is being exploited by malicious actors to launder stolen funds, with shifts noted from the previously favored Tornado Cash to Bitcoin mixers post increased regulatory scrutiny, says blockchain security firm, CertiK. Over $300 million stolen in major exploits of 2023 ended up being laundered via Bitcoin. Bitcoin mixers, by dispersing deposited Bitcoin over various wallets in uneven proportions, further complicate tracking. CertiK anticipates this shift to be more than a transitory trend, underlying the need for more advanced countermeasures and tracing of 'dirty' funds to combat financial crime in the crypto space.
Bitcoin's decentralised framework, whilst liberating many by enabling asset transfers free of censorship risk, has also become a haven for malevolent players utilising the network's intrinsic privacy to transfer stolen funds. In the period preceding the 2022 sanctions imposed by the United States Treasury Department's Office of Foreign Assets Control (OFAC), Tornado Cash was a popular tool for hackers laundering stolen cryptocurrency. Per OFAC data, approximately $7 billion in crypto assets had been cleaned using the mixer from 2019 up until the sanctions. However, revealing information from blockchain security organization CertiK indicates a trend shift occurred in 2023. Examination of data by CertiK shows that over $300 million looted from 50 of the most significant heists of 2023 found their way into Bitcoin, as criminals searched for alternative avenues to relocate their illegal proceeds in the aftermath of heightened regulatory examination of Tornado Cash.
Crypto mixers, or protocols that preserve the privacy of crypto transactions, perform their function by blending potentially traceable funds with large amounts of additional funds to render transfers between wallet addresses anonymous. CertiK's rapid response unit chief, Joe Green, said in an interview with Cointelegraph that while Bitcoin's decentralization and privacy features empower lawful users, they can also be manipulated for inappropriate purposes. He added that the Bitcoin ecosystem offers an array of privacy mixers that cater to both privacy-minded users and those harboring illicit motives.
The gravitation towards Bitcoin mixers indicates that bad actors are on the hunt for alternatives to Tornado Cash in light of regulatory sanctions. Analysis by CertiK underscores that Bitcoin mixers like Sinbad, which are also on the OFAC's list of sanctions, have been chosen as a tool by notorious crypto hacking group, Lazarus, in 2023.
As per CertiK, Bitcoin mixers utilise a unique method to maintain the anonymity of transactions. Unlike mixers such as Tornado Cash which obscure the connection between the sender and recipient, Bitcoin mixers enable users to deposit Bitcoin and disperse it over various wallets in uneven proportions, making tracking more intricate.
While Tornado Cash continues to be the preferred mixer for minor scale cyber crimes, notable incidents involving sums of $50 million or higher have started resorting to laundering solutions based on Bitcoin. It is anticipated by CertiK that this shift might not merely be a passing trend but could also hint at challenges that the crypto landscape may confront in the future.
As cyber criminals sophisticatedly adapt their crypto laundering methods, a dire need arises for the development of more flexible counter-terrorist measures against cyber financial crime. Green suggests that the most powerful countermeasure could be extensive tracking of 'dirty' funds movement and sharing this information with pertinent parties like exchanges. He also posits that it's crucial for all stakeholders to stay aware and informed about the strategies adopted by criminals, to ensure they can effectively counter them.
Published At
12/14/2023 3:49:43 PM
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