WazirX Hacker Transfers 5,000 ETH, Launders Funds Through Tornado Cash

The hacker responsible for the devastating July 2023 WazirX exploit has made another move, transferring 5,000 ETH, valued at approximately $12 million, to a new wallet and then using Tornado Cash to launder the funds. According to blockchain security firm PeckShieldAlert, the WazirX hacker is actively laundering Ethereum from the exploit, raising concerns about the security of crypto exchanges and the ability to recover stolen assets.

WazirX Hacker Transfer 5,000 ETH to New Wallet

PeckShieldAlert, a prominent blockchain security platform, revealed that the WazirX hacker transfer 5,000 ETH to a wallet identified by the address “0x2…968” before starting to funnel the funds through Tornado Cash. Tornado Cash, a popular crypto mixing service, has been at the center of regulatory scrutiny, with U.S. authorities accusing it of laundering over $7 billion in crypto funds since 2019.

Upon receiving the 5,000 ETH, the hacker quickly began distributing the funds in batches of 100 ETH, sending 1,600 ETH ($3.8 million) through Tornado Cash within 30 minutes of the initial transfer. At the time of reporting, 3,399.92 ETH (around $8.19 million) still remained in the exploiter’s wallet, signaling that more laundering activity could follow.

History of WazirX Exploiter’s Activities

The WazirX hacker has already laundered significant amounts of Ethereum in the past few days. On September 2, the attacker laundered 2,600 ETH, worth $6.5 million, using the same method. This transaction, executed through Tornado Cash, involved 26 transfers, each consisting of 100 ETH.

With the latest transfers, the hacker has laundered a total of 4,200 ETH, amounting to $10.11 million at current market rates. These moves showcase the effectiveness of Tornado Cash in obscuring the trail of illicit crypto transactions, which has caused concerns in the regulatory sphere.

According to Chainalysis, the role of mixers like Tornado Cash in laundering crypto funds has grown over the years, particularly in cases involving large-scale cybercrimes. “Mixers are a significant risk for regulators, especially in cases like the WazirX exploit where attackers are able to move large amounts of stolen funds quickly and anonymously,” said Kim Grauer, Director of Research at Chainalysis.

WazirX Struggles to Recover From July Attack

The WazirX exploit, which occurred in July 2023, resulted in a staggering loss of $235 million. The attack crippled the popular Indian cryptocurrency exchange, forcing it to initiate a Singapore Scheme of Arrangement a legal restructuring process used to manage insolvency under Singaporean law.

Since the attack, WazirX has been struggling to regain customer trust, as the platform has not fully restored withdrawal capabilities. Users were given partial access to their funds, with phased INR withdrawals beginning on August 26. Customers have only been able to access 66% of their funds, which has sparked significant backlash.

“I can’t believe they’re limiting us to only 66% of our money after such a long wait. What about the rest of our crypto holdings?” one WazirX customer posted on social media, echoing the frustrations of many. The partial withdrawals have fueled outrage among users, some of whom have taken to Twitter and other platforms to question when full access will be restored.

Despite assurances from WazirX management, the platform remains in a precarious position as users demand answers. As of now, cryptocurrency withdrawals are still suspended, and no clear timeline has been given for when full functionality will be restored.

Tornado Cash’s Controversial Role in Crypto Laundering

Tornado Cash, the mixing service used by the WazirX hacker Transfer to launder funds, has been a major point of contention in the crypto world. The service allows users to obscure the origin of their crypto transactions by pooling assets and mixing them before redistribution. While some argue that Tornado Cash offers much-needed privacy in an industry that values decentralization, regulators have taken a harder stance.

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has already sanctioned Tornado Cash, citing its role in laundering illicit crypto funds, including funds tied to North Korean hacking group Lazarus. According to OFAC, Tornado Cash has facilitated the laundering of over $7 billion worth of cryptocurrencies since its launch in 2019.

“Services like Tornado Cash present a unique challenge to regulators as they operate in the gray area of providing both privacy and aiding money laundering,” said Jake Chervinsky, Chief Policy Officer at the Blockchain Association. “The WazirX hacker Transfer use of Tornado Cash only adds fuel to the fire for those advocating for stricter regulations on privacy tools in the crypto space.”

WazirX, once one of India’s most prominent crypto exchanges, faces an uphill battle as it works to recover from the July exploit and reassure its customers. With millions of dollars in stolen funds now laundered through Tornado Cash, the prospects for recovery seem bleak.

For many in the industry, the WazirX hacker Transfer activity highlights the ongoing risks posed by decentralized, anonymous tools like Tornado Cash. As regulatory scrutiny increases and exchanges work to enhance security, incidents like this continue to challenge the perception of crypto as a secure and reliable financial ecosystem.

WazirX is expected to continue pursuing legal avenues to reclaim the stolen funds, but with the hacker still actively laundering funds, the odds of full recovery grow slimmer by the day.

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