Today, security companies Peckshield and CertiK reported that an Ethereum address associated with a DAO Maker vulnerability from 2017 laundered 500,000 DAI stablecoins through Tornado Cash.
DAO Maker is a platform for crowdfunding that was compromised in August 2021. Due to a flaw in the smart contract of DAO Maker, a hacker was able to steal more than $7 million in stablecoins. The hacker subsequently dispersed this cash over other addresses he controlled.
One year after the event, one of the addresses that Etherscan identified as the DAO Maker exploiter has transferred $500,000 worth of DAI stablecoins using Tornado Cash. Because Tornado Cash conceals transactional activity, it is often used by cybercriminals to launder stolen funds.
In recent weeks, Tornado Cash has been in the limelight because of U.S. sanctions. The Treasury’s Office of Foreign Assets Control (OFAC). Given the app’s potential for money laundering, all US-based persons and organizations are forbidden from communicating with it after the imposition of sanctions.
Even after the sanctions were issued, hackers of decentralized financial systems continued to use Tornado Cash, as seen in today and other recent instances.
PeckShield noticed on August 19 that an address involved in a December 2021 Grim Finance scam transferred about $3.3 million to Tornado Cash. Then, on September 6, the culprit of MonoX Finance engaged in money laundering using Tornado Cash.
Tornado was initially designed to protect the anonymity of Ethereum users, but it has now become a tool for hackers to launder illicitly acquired money. In accordance with U.S. Treasury Department, illicit actors like North Korea’s Lazarus organization have utilized Tornado to trade over $7 billion in crypto assets since its inception in 2019.
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