In September 2024, the cryptocurrency world witnessed a notable surge in Ethereum laundering as hackers managed to move nearly $50 million worth of stolen ETH through Tornado Cash. This significant event not only underscores persistent security issues within the crypto space but also highlights broader implications for the Ethereum market and regulatory landscape.
A Surge in Ethereum Laundering
Recent data from SpotOnChain reveals that between September 1 and 8, four hackers engaged in extensive Ethereum laundering, transferring a staggering $49.3 million in stolen ETH through Tornado Cash. This massive operation targeted high-profile victims, including the crypto exchange WazirX, DeFi protocols Penpie and LiFi, and crypto entrepreneur Bo Shen.
The Penpie hacker has been particularly active in Ethereum laundering, transferring 11,261.2 ETH (approximately $26.72 million) within a single week. This indicates that the hacker has successfully laundered all the stolen funds, showing a clear intent to evade recovery efforts. Despite Penpie’s offer of a 10% bounty for the return of the assets, this offer has been disregarded, reflecting the hacker’s determination to retain the stolen funds.
In an unexpected turn, an address connected to the Euler Finance hack of March 2023, which did return stolen funds, sent a congratulatory message to the Penpie hacker. The message praised the hacker for their success in Ethereum laundering, highlighting a concerning attitude among some actors who view such activities as achievements.
The WazirX Hacker’s Cautious Approach
In contrast, the hacker behind the WazirX breach has taken a more cautious approach to Ethereum laundering. This hacker, who stole over $230 million in ERC-20 tokens, has thus far laundered $18.51 million (7,600.1 ETH) through Tornado Cash. With $123.32 million (54,155 ETH) still in their possession, the hacker is likely employing a slow and steady strategy to avoid drawing too much attention.
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Other hackers have also participated in Ethereum laundering this month. The LiFi hacker, responsible for a $9.7 million theft in July, sent 200 ETH (worth $484,400) through the mixer. Similarly, the hacker who stole $42 million from Bo Shen in November 2022 transferred 1,500 ETH (approximately $3.57 million) in a laundering operation.
Impact on Ethereum’s Market
The recent increase in Ethereum laundering has had a noticeable effect on Ethereum’s market performance. The value of ETH has dropped by 13% in September, falling below $2,200 and raising concerns about its long-term potential. Analysts attribute this decline to several factors, including decreased blockchain activity, market uncertainty, and regulatory pressures.
Ethereum’s performance is notably weaker compared to other major cryptocurrencies. It ranks 13th among 22 major Layer 1 projects in terms of yearly returns with a 62% gain. In contrast, Bitcoin shows a 138% return, while Solana leads with an impressive 624%. Over the past 30 days, Ethereum has been one of the worst-performing assets, reflecting the impact of Ethereum laundering and other market pressures.
Tornado Cash’s Persistent Role in Ethereum Laundering
Despite being sanctioned by the US Treasury in August 2022, Tornado Cash continues to facilitate Ethereum laundering. The platform recorded $1.8 billion in transactions during the first half of 2024, demonstrating its ongoing role in the laundering of stolen cryptocurrency.
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The return of hackers to Tornado Cash raises questions about the effectiveness of regulatory measures. Although sanctions were intended to disrupt the mixer’s operations, its continued use for Ethereum laundering suggests that these measures may not fully address the issue.
The recent surge in Ethereum laundering through Tornado Cash highlights significant challenges in the cryptocurrency space. As hackers exploit decentralized tools to obscure their activities, the impact on Ethereum’s market value and the broader regulatory landscape becomes increasingly pronounced. While regulatory actions evolve, the ongoing use of mixers like Tornado Cash indicates a need for more effective solutions to combat cryptocurrency crime and stabilize the market.
As these issues unfold, it is essential for stakeholders—including regulators, investors, and developers—to collaborate on developing robust strategies to safeguard the future of digital assets against the threat of Ethereum laundering.
