As Web3 and crypto go mainstream, several decentralized finance (DeFi) platforms have fallen victim to hacking exploitations, losing millions of dollars in assets to criminals. While DeFi projects seek ways to avoid this menace, the crypto platform LendHub has succumbed to the same fate, losing $6 million in digital assets to an exploit in January.
The latest reports revealed that OFAC-sanctioned crypto mixer Tornado Cash remains an escape route for bad actors who want to launder illegal funds. Blockchain security platforms, Beosin and PeckShield, reported that LendHub exploiters have moved $3.85 million in ETH into Tornado Cash.
Both firms shared the update via Twitter, noting the hack suspects sent about 2,415 ETH worth nearly $3.85 million to Tornado Cash.
LendHub Exploiters Moved $5.7 Million To Tornado Cash
LendHub informed its users that it lost $6 million worth of assets through a January 12 hack attack. According to LendHub, the exploit was possible due to a compromise in its platform, causing a disparity between old and new IBSV tokens.
This issue resulted in different Comptroller contracts with the same market price. The hackers leveraged this vulnerability to loot millions of dollars from the protocol.
The firm contacted blockchain security experts to track the thieves and recover the stolen money. And since then, security firms have been on the hackers’ tail, trying to recover the funds. They seemed to have made a breakthrough, as PeckShield and Beosin spotted the suspects moving to launder the proceeds through Tornado Cash.
PeckShield tweeted that the hackers moved 2,415.4 ETH to the OFAC-sanctioned Tornado Cash mixer, while Beosin reported the movement of over $5.7 million worth of ETH.
Per that Beosin’s tweet, a wallet linked to the exploit has moved 3,515.4 ETH ($5.7 million) to Tornado Cash since January 13. The report shows the criminal sent the funds in batches of 100 ETH.
Tornado Cash, An Escape Route For Crypto Scammers And Hackers
In attempts to make Ethereum transactions anonymous, Tornado Cash has provided means for criminals to launder stolen funds. The currency mixer protects user identity and hides transaction sources by combining large amounts of ETH into almost infinite transaction trails before deposing the sum into target addresses.
Due to the rate of money laundering via the platform, the United States Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash on August 8, 2022. After the sanction, authorities took down the Tornado Cash website. However, criminals can still launder money through the mixer since its smart contract is on a decentralized blockchain.
Chainalysis’ January report noted that hacks and scams contributed to about 34% of all inflows into Tornado Cash. The report even said the mixer sometimes receives daily inflows of up to $25 million. However, 30 days after the sanction, Tornado Cash inflows dropped by 68%, suggesting the effort was not in vain.
However, some criminals have not quit using the mixer. On February 20, the Hope Finance hacker transferred $1.86 million of stolen crypto to Tornado Cash.
Also, the North Korean hacker Lazarus Group often uses Tornado Cash to launder its proceeds. The report by Chainalysis suggests that North Korean hackers utilize currency mixers to launder money more often than other hacker groups.
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