Recently, blockchain analytics firm Elliptic uncovered that the notorious North Korea-backed hacker group Lazarus has once again turned to using the sanctioned crypto mixer Tornado Cash to conceal its transactions. This move comes after a significant decline in the group’s usage of the mixer last year following US government sanctions.
Impact of US Sanctions
After being slapped with US government sanctions due to allegations of assisting criminals in laundering illegally obtained digital assets, Lazarus abandoned Tornado Cash and explored alternative options like Sinbad.io and cross-chain bridges. However, with Sinbad.io also facing sanctions for facilitating money laundering for North Korean state-sponsored hacking groups, Lazarus has found limited options, ultimately leading them back to Tornado Cash.
Despite facing scrutiny and sanctions, Tornado Cash has managed to remain operational due to its decentralized nature. The inability of the government to curb the mixer’s operations effectively is highlighted by Lazarus Group’s recent move of approximately $13 million in stolen funds through Tornado Cash in over 40 transactions within just three days.
Challenges for Law Enforcement
Elliptic pointed out that Tornado Cash, operating through decentralized blockchains and smart contracts, cannot be easily seized or shut down like centralized mixers. Tom Robinson, the co-founder of Elliptic, noted that the crackdown on centralized mixers by law enforcement agencies is pushing crypto laundering activities towards decentralized alternatives such as Tornado Cash.
Resurgence of Tornado Cash
Data from DeFillama suggests a resurgence in the usage of Tornado Cash, with the total value of assets locked reaching $565 million, the highest level since the US government imposed sanctions in 2022. The protocol’s native TORN token also experienced an uptrend, trading at approximately $2 and witnessing a 13% increase in value over the past day.
Despite facing legal actions from multiple governments, including the US, the developers behind Tornado Cash have received support from notable crypto stakeholders like Coinbase. The crypto community has rallied behind the project’s developers, demonstrating solidarity and backing for their legal defense efforts amidst the regulatory challenges they are encountering.
The resurgence of Lazarus Group’s usage of Tornado Cash reflects the ongoing challenges faced by law enforcement in cracking down on decentralized crypto mixers. The decentralized nature of Tornado Cash, coupled with the support from the crypto community, poses significant obstacles for regulatory authorities in combating illicit activities in the crypto space.
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