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Indicating that it may be the source of stolen tokens from a decentralized finance (Defi) network, PeckShield claims that $500,000 worth of Dai has been moved through a crypto mixer known as Tornado Cash.
To explain this concept in more layman’s words, crypto mixers make it more difficult to determine the destination of a token. Because of this, it is more difficult for anyone to keep track of it.
A breach occurred on the cryptocurrency fundraising platform known as Dao Maker (which is not affiliated with Maker DAO) in August of 2021. Because of this, $7 million worth of ether and a variety of stablecoins were stolen. data stored on the blockchain indicates that the monies were transmitted to two different wallets.
Tornado Cash was the recipient
of about $6.2 million worth of ether that was sent from one of the bitcoin wallets. According to information gained through reviewing blockchain records, the other wallet that held the remaining sum has remained dormant up until the present day.
Tornado was previously involved in a money laundering scheme in which ether worth $15 million was taken from a company based in Singapore called Crypto.com. This scheme occurred prior to this occurrence.
Because of the frequency with which ‘Tornado Cash,’ alleged money laundering, and stolen funds have been linked to one another, the question of whether or not it is guilty of money laundering has been brought up. The developer of the protocol stated that the system is not managed by any one entity and is designed to be unstoppable. He also stated that it was not his aim to assist illicit acts when he developed the protocol.
The Office of Foreign Assets Control (OFAC) of the United States Treasury issued a ban on Tornado Cash in August, making it impossible for people and businesses of the United States to engage with the cryptocurrency. It is unknown whether this decision was made in response to the hack of the Dao Maker.