The blockchain analytics firm Elliptic recently uncovered that the North Korea-backed hacker group Lazarus has once again turned to the sanctioned crypto mixer Tornado Cash to disguise its transactions. This comes after a period of dormancy following US government sanctions in response to allegations of assisting criminals in laundering illegally obtained digital assets. Despite the decline in Tornado Cash’s overall volume last year, hackers sought out alternative options like Sinbad.io and cross-chain bridges due to the sanctions imposed by the US government. However, the subsequent sanctions on Sinbad.io have left limited choices for Lazarus, leading to their return to Tornado Cash, which has managed to stay operational despite facing US sanctions because of its decentralized nature.
According to Elliptic, Lazarus Group recently transferred approximately $13 million in funds stolen from the HTX Exploit through Tornado Cash in over 40 transactions within the past three days. This marks their first movement of funds since the incident in November 2023. The return of Lazarus Group to Tornado Cash showcases the challenges faced by governments in effectively curbing the operations of decentralized mixers like Tornado Cash. Elliptic emphasized the difficulty in seizing and shutting down decentralized mixers because they operate through smart contracts on decentralized blockchains. Tom Robinson, co-founder of Elliptic, commented on the situation, stating, “The takedowns of centralized mixers by law enforcement agencies is perhaps pushing crypto laundering back towards decentralized alternatives.”
Data from DeFillama suggests a resurgence of activity on the platform, with the total value of assets locked reaching $565 million, the highest level since the US government imposed sanctions in 2022. This upward trend is also evident in the trading price of the protocol’s native TORN token, which was valued at approximately $2 at the time of reporting, reflecting a 13% increase in the past day, based on data from CryptoSlate. Despite facing legal actions from various governments, including the US, the crypto community has shown support for the developers of Tornado Cash. Major stakeholders in the crypto industry, such as Coinbase, have backed the developers in their legal defense efforts.
The resurgence of Lazarus Group utilizing Tornado Cash highlights the challenges faced by regulatory authorities in combating illicit activities in the crypto space. The decentralized nature of platforms like Tornado Cash poses unique obstacles for enforcement agencies, making it difficult to completely shut down such operations. The ongoing support from the crypto community for projects like Tornado Cash underscores the importance of decentralized solutions in the evolving landscape of cryptocurrency transactions and security.
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