Blockchain analysis firm Arkham Intelligence says that crypto mixing platform Tornado Cash has recovered after sanctions imposed on the service by the US government over a year ago and the arrest of its key figures. Arkham Intelligence says that Tornado Cash is still the largest crypto mixer on Ethereum (ETH) and that “$77.35 million in […]
The post Crypto Mixer Tornado Cash Still Going Strong on Ethereum Despite US Treasury Sanctions: Arkham Intelligence appeared first on The Daily Hodl.
The purchase was funded from a digital wallet, which has been a part of the chain of transactions, anonymized by the Ethereum coin mixing service Tornado Cash.
One of the CrypToadz nonfungible tokens (NFTs), whose average price doesn’t exceed $1,000, was bought for an astonishing 1,055 Wrapped Ethereum (wETH), an equivalent of $1.6 million.
The deal occurred on the OpenSea market on Oct. 9. The NFT represents “a small, warty, amphibious creature,” one of the 6,969 units minted by the pseudonymous digital artist Gremplin. The CrypToadz collection was launched during the NFT boom of 2021 and surpassed a trading volume of 12,000 Ether (ETH) ($38 million) during its first 10 days on the market.
The purchasing wallet was funded by a wallet that has been pulling money out of Tornado Cashhttps://t.co/nNhKvSVhoz pic.twitter.com/aInHO8vNyG
— TexasHedge (@0xTexasHedge) October 9, 2023
However, the price paid by the anonymous user for the NFT raised questions among the community. Two weeks ago, this item was acquired for 0.95 ETH (around $1,600), only to be sold for a price a thousand times higher.
Related: North Korean Lazarus Group amasses over $40M in Bitcoin, data reveals
Moreover, the purchase was funded from a digital wallet, which has been a part of the chain of transactions, anonymized by the Ethereum coin mixing service Tornado Cash. The new owner of the CrypToadz NFT received 1,115.9 ETH ($1.6 million) on Oct. 5.
Although some X (Twitter) users preferred to qualify the weird purchase as a “fat finger mistake” during the transaction, it could be an example of wash trading, a tactic to withdraw funds of suspicious origin through a long chain of deals and exchanges.
Tornado Cash is famous for its popularity among scammers seeking to wash their funds. In August 2023, the United States Office of Foreign Assets Control (OFAC) even announced sanctions against the crypto mixer for its alleged role in laundering crime proceeds. However, these sanctions couldn’t completely cut off the mixer’s usage.
For example, in July 2023, almost $60 million in Ether, stolen from the AnubisDAO two years earlier, was moved via Tornado Cash. The person possessing the 13,556 ETH divided and transferred the funds into 100 ETH transactions.
Magazine: The truth behind Cuba’s Bitcoin revolution: An on-the-ground report
The co-creator of Ethereum (ETH) is detailing a mechanism by which dishonest crypto users can be rooted out of crypto mixing protocols. In a new paper, Ethereum co-creator Vitalik Buterin and four additional authors detail how privacy pools can be useful in weeding out unscrupulous crypto traders. A privacy pool is a smart contract-based privacy […]
The post Ethereum Creator Vitalik Buterin Co-Authors Paper Detailing Method for Weeding Out ‘Dishonest’ Crypto Users appeared first on The Daily Hodl.
Roman Storm, facing charges related to Tornado Cash allegedly facilitating money laundering, has been free on bail following his arrest by U.S. authorities in August.
Roman Storm, the co-founder of controversial cryptocurrency mixer Tornado Cash arrested in August, has reportedly pleaded not guilty to all charges related to money laundering and violations of United States sanctions.
According to an Sept. 6 X thread from Inner City Press, Storm pleaded not guilty before a judge in U.S. District Court for the Southern District of New York. He, along with his alleged co-conspirator Roman Semenov, have been charged with conspiracy to commit money laundering, conspiracy to commit sanctions violations and conspiracy to operate an unlicensed money-transmitting business.
The charges were centered around Tornado Cash allegedly facilitating the efforts of the North Korean Lazarus Group bypassing U.S. sanctions, allowing the country’s regime to reportedly fund its nuclear program. Storm was released on a $2-million bond shortly after his arrest and is largely restricted from traveling outside certain regions of New York, New Jersey, Washington, and California.
In August 2022, authorities in the Netherlands arrested Tornado Cash co-founder Alexey Pertsev for similar charges related to money laundering with the Lazarus Group. He was released from jail in April 2023 to await the start of his trial from his home while under electronic monitoring. At the time of publication, Semenov remained at large.
Sorry I was afk for a while, what did I miss?
— Alexey Pertsev (@alex_pertsev) April 28, 2023
Related: Financial privacy and regulation can co-exist with ZK-proofs — Vitalik Buterin
The U.S. Treasury Department’s Office of Foreign Assets Control added Tornado Cash to its Specially Designated Nationals list — sanctioned entities — in August 2022, prompting criticism from many in and out of the crypto space as an overreach of the government department’s authority. In September 2022, several individuals filed a lawsuit against the move with the financial backing of crypto exchange Coinbase, but a judge sided with the U.S. Treasury in an August ruling.
For many in crypto, the allegations against the Tornado Cash co-founders are far from black and white issues. Ethereum co-founder Vitalik Buterin publicly acknowledged using the mixer to send funds to those affected by the war in Ukraine, which has been ongoing since February 2022.
Magazine: Tornado Cash 2.0: The race to build safe and legal coin mixers
One of the founders of crypto mixer Tornado Cash has been released on bail after being charged with laundering $1 billion by the U.S. Department of Justice (DOJ). According to defense attorney Brian Klein, Roman Storm, one of the founders of the sanctioned crypto mixer, has been released on bail. However, according to Klein, the […]
The post US Releases Tornado Cash Founder on Bail After $1,000,000,000 Money Laundering Charge appeared first on The Daily Hodl.
Roman Storm’s lawyer Brian Klein said the developer was released on bail on Aug. 24, the day after the U.S. DOJ announced the charges related to money-laundering and other alleged violations.
Roman Storm, the co-founder of the cryptocurrency mixing service Tornado Cash who was arrested on money-laundering and other charges on Aug. 23, was released on bail soon after he was detained by the United States’ Department of Justice (DOJ), his lawyer said.
Storm’s lawyer Brian Klein took to X (formerly Twitter) on Aug. 24 to announce that Storm has been released on bail.
Klein noted that he still remains “very disappointed” about the fact that the prosecutors charged the developer just because he helped to develop software. He added:
“Their novel legal theory has dangerous implications for all software developers.”
The bail came the next day after the U.S. DOJ announced the arrest of Storm alongside the charges against Tornado Cash founders, Storm and Roman Semenov, on Aug. 23.
The U.S. authority specifically charged the developers with operating the Tornado Cash services and allegedly laundering more than $1 billion in “criminal proceeds.” Additional charges are related to “conspiracy to commit sanctions violations,” as well as “conspiracy to operate an unlicensed money transmitting business.”
Storm’s lawyer Klein did not immediately respond to Cointelegraph’s request for comment.
Related: Tornado Cash lawsuit judge sides with US Treasury in motions for summary judgment
The latest news comes roughly a year after the U.S. Treasury Department added Tornado Cash-related addresses to the list of Specially Designated Nationals of the Office of Foreign Asset Control. Subsequently, authorities in the Netherlands arrested another Tornado Cash developer, Alexey Pertsev. The developer was released from jail in April 2023, after spending nearly nine months in prison.
Pertsev and Storm are not the only prosecuted developers related to Tornado Cash, though. Another co-founder, Roman Semenov, was added in the OFAC’s list of Specially Designated Nationals and Blocked Persons on Aug. 23 as well. The developer remains at large.
Sanctions on crypto mixer Tornado Cash have been upheld by a US court after the judge decided that, among other reasons, First Amendment rights do not apply to the case. Tornado Cash was blacklisted by the Treasury Department in August of 2022 for allegedly being a national security threat, partially because it reportedly may have […]
The post US Court Says First Amendment Claims on Tornado Cash Are Irrelevant As It Upholds Sanctions appeared first on The Daily Hodl.
Competing motions for summary judgment saw a federal judge rule the U.S. Treasury was within its authority to declare Tornado Cash a sanctioned entity.
A federal judge in Texas has sided with the United States Department of the Treasury by granting a motion for summary judgment in a lawsuit concerning Tornado Cash brought by six individuals backed by crypto exchange Coinbase.
In an Aug. 17 filing in the U.S. District Court for the Western District of Texas, Judge Robert Pitman denied a motion filed in April by plaintiffs Joseph Van Loon, Tyler Almeida, Alexander Fisher, Preston Van Loon, Kevin Vitale and Nate Welch requesting partial summary judgment in a case over controversial mixer Tornado Cash. Pitman, however, granted a similar motion filed by the U.S. Treasury Department.
“This case is about Tornado Cash — but the parties disagree on how to characterize Tornado Cash,” said Pitman. “Plaintiffs argue that [Treasury’s Office of Foreign Assets Control’s] designation of Tornado Cash exceeds the Department’s statutory authority over foreign nationals’ interests in property and violates the Free Speech Clause. [...] The government, on the other hand, argues that Tornado Cash is an entity that may be designated and that it has a property interest in the smart contracts.”
In August 2022, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) added Tornado Cash to its Specially Designated Nationals list. Many crypto users criticized the move as an overreach of authority. The six aforementioned individuals, with the support of Coinbase, filed a lawsuit against the government department in September 2022, seeking to reverse the designation. Crypto advocacy group Coin Center followed with its own suit in October.
Related: Coinbase futures approval seen as a major win amid the war on crypto
Pitman largely dismissed the plaintiffs’ arguments, ruling that Tornado Cash was “an entity that may be designated per OFAC regulations,” and its addition to a list of sanctioned entities did not exceed Treasury’s statutory powers and was “not plainly inconsistent with its regulations.” The ruling claimed developers could analyze and teach the code behind the mixer but not “execute it and use it to conduct cryptocurrency transactions.”
Coinbase chief legal officer Paul Grewal reacted to the judge’s decision on X (formerly Twitter), saying the exchange intended to support an appeal to the Fifth Circuit.
Rights are rarely secured on a path that is always ⬆️ and ➡️. We continue to believe Plaintiffs' challenge to OFAC's Tornado Cash action is right. We’ve always known that Fifth Circuit review is required to resolve these issues, and we continue to support them on appeal. 1/4 pic.twitter.com/Tz8FkFCSf2
— paulgrewal.eth (@iampaulgrewal) August 17, 2023
Coinbase is currently embroiled in a civil case with the U.S. Securities and Exchange Commission (SEC) filed in June. Though the OFAC and SEC cases are significantly different, Grewal has made similar arguments in both lawsuits, claiming in the latter the commission’s enforcement action against the crypto exchange represented an overreach in its authority granted by Congress.
Magazine: Tornado Cash 2.0: The race to build safe and legal coin mixers
After almost two years, the stolen 13,556 ETH, which was worth nearly $60 million, amounted to almost 26.2 million at the time of writing.
Nearly two years after the dog-inspired decentralized finance (DeFi) project — AnubisDAO — was rug-pulled for almost $60 million in Ether (ETH), the stolen funds were siphoned away using Tornado Cash.
In October 2021, AnubisDAO raised 13,556 ETH from crypto investors owing to the predated Dogecoin (DOGE) trend. However, roughly 20 hours into the investment, the funds were sent to a different address — resulting in an instant loss for the investors.
Between July 15 and 16, the illicit funds were moved via Tornado Cash, a decentralized protocol that allows private transactions. The person in possession of the 13,556 ETH divided and moved the funds via 100 ETH per transaction, as shown in the screenshot below.
The information was brought forward by blockchain investigator PeckShield, back when 13,556 ETH was worth roughly $60 million. After almost two years, the stolen funds amounted to almost 26.2 million at the time of writing.
It seems the rugged @AnubisDAO funds are being washed via @TornadoCash https://t.co/DPoZ1ifSNX https://t.co/LvDSUsL6tS pic.twitter.com/mKfSdTE6D9
— PeckShieldAlert (@PeckShieldAlert) July 16, 2023
As the duped investors see their funds being siphoned away into the abyss, a few remain optimistic about a highly unlikely scenario of getting a refund once the bear market recovers. As a result, investors are advised to do thorough research about a project and its founders before making any investment.
Related: Crypto scams are down 77% — but this exploit is making a huge comeback
Losses from the Multichain exploit forced lending protocol Geist Finance to shut down permanently. The latest post confirms the team does not plan to reopen lending and borrowing on Geist.
1/2 After confirmation from Multichain that the funds will not be recovered, we are announcing that Geist will not reopen. Because Chainlink oracles are tracking the value of real USDC, USDT, WBTC or ETH, they are not aware of the real value of Multichain assets.
— Geist Finance (@GeistFinance) July 14, 2023
A related technical complication makes it “impossible” for Geist Finance to reenable lending as doing so would result in bad debt for holders of non-Multichain coins such as Magic Internet Money (MIM) or Fantom (FTM).
Magazine: Experts want to give AI human ‘souls’ so they don’t kill us all
The crypto industry advocacy group has placed its support behind Coin Center and its lawsuit against the U.S. Treasury over its Tornado Cash sanctions.
The Blockchain Association and the DeFi Education Fund have become the latest industry advocates to file their support of Coin Center’s lawsuit against the United States Treasury over its “unlawful” sanctions against Tornado Cash.
On June 2, the two cryptocurrency industry advocacy groups filed a joint amicus brief in support of Coin Center, arguing that the U.S. sanctions against the crypto mixer should be dropped.
1/ Today, my colleagues and I at @BlockchainAssn and our partners at @fund_defi filed an amicus brief in support of @coincenter's lawsuit against OFAC fighting against sanctions of the Tornado Cash software protocol.
— Marisa Tashman Coppel (@MTCoppel) June 2, 2023
https://t.co/mSZW7nVDOb pic.twitter.com/Y4CxjJtBrq
They called the sanctions imposed by the Treasury’s Office of Foreign Assets Control (OFAC) “both unprecedented and unlawful,” and added:
“OFAC’s sanctions are unlawful. OFAC lacks statutory authority to sanction software like Tornado Cash, and regardless, its decision lacks any factual predicate that could render the sanctions lawful.”
The associations argued Tornado Cash is software and while OFAC has the legal authority to sanction people or property, it cannot sanction a decentralized protocol.
“The core Tornado Cash software is not and cannot be owned by anyone,” they argued, claiming that OFAC “conjured” up a “person” so it had a basis to sanction the crypto mixer.
5/ By sanctioning the Tornado Cash software protocol, OFAC infringes on the right to free speech and due process.
— Marisa Tashman Coppel (@MTCoppel) June 2, 2023
Americans who wish to engage in anonymous speech or association can no longer do so.
Nor did they have notice when they were blocked from accessing their assets.
The brief admitted there was malicious use of the protocol for money laundering, mostly by North Korean-affiliated hackers, but also pointed to the other less nefarious uses — namely to enhance privacy on the publicly viewable Ethereum blockchain.
The groups argued the sanctions should be declared unlawful and the enforcement of them should be legally prohibited by the courts.
Related: Tornado Cash governance control set to be restored as voters approve proposal
In April, the two groups similarly filed an amicus brief in support of a nearly identical lawsuit brought by six individuals against the Treasury Department over its Tornado Cash sanctions.
The lawsuit, filed in September, is backed by the crypto exchange Coinbase, which is similarly wanting to remove the ban on the mixer.
The Treasury, however, claimed such crypto mixers are a national security threat and Tornado Cash repeatedly failed to create controls to stop money laundering.
Magazine: $3.4B of Bitcoin in a popcorn tin — The Silk Road hacker’s story
