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Deribit Hackers Transfer Stolen Ethereum to Tornado Cash

Hackers behind the $28 million Deribit crypto exchange heist are moving stolen Ethereum to the sanctioned Tornado Cash mixer, raising regulatory concerns.
Published on 2022-11-08

Deribit Hackers Transfer Stolen Ethereum to Tornado Cash

Hackers responsible for the $28 million theft from Deribit, a Panama-based cryptocurrency derivatives exchange, have started transferring stolen Ethereum (ETH) to Tornado Cash, a sanctioned crypto mixing service. The breach occurred on November 1st, 2023, when attackers compromised Deribit's hot wallet, siphoning Bitcoin (BTC), ETH, and USD Coin (USDC).

On-chain data reveals that the hackers used 17 transactions to move 1,610 ETH, valued at approximately $2.5 million, to Tornado Cash. The first transaction, worth $350,000, was made on November 5th. However, the majority of the stolen funds—around $25.5 million—remain unaccounted for.

Implications for Tornado Cash

Tornado Cash, a decentralized cryptocurrency mixer, was sanctioned by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) on August 8, 2022. The sanctions were imposed due to its involvement in laundering over $7 billion in stolen funds. Despite this, the service continues to be used by hackers, further validating regulatory concerns.

Crypto advocacy group Coin Center has challenged OFAC's decision to blacklist Tornado Cash, arguing against the sanctions. However, the ongoing use of the mixer by malicious actors underscores the reasons behind its blacklisting.

Deribit's Response

Following the hack, Deribit conducted a security review, resumed withdrawals, and committed to reimbursing users for their losses. This proactive approach aims to restore trust and ensure customer protection.

Why This Matters

The persistent use of Tornado Cash by hackers and fraudsters reinforces regulators' claims about the risks associated with unregulated crypto tools. As the crypto industry evolves, such incidents highlight the need for stricter oversight and compliance measures to combat financial crimes.

This case serves as a reminder of the vulnerabilities in cryptocurrency systems and the importance of robust security protocols to safeguard user assets.

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