The Hacker who exploited Kronos Research for $25 million in November 2023 has moved $4 Million of Ethereum through Tornado Cash, attempting to launder the funds.
The quantitative trading firm Kronos Research was exploited In November 2023 after hackers accessed its compromised API keys. The firm first denied any loss of funds during its early announcement on x.
However, on-chain investigator ZachXBT later revealed that 12,800 ETH worth $25 million was stolen via an X thread. The funds were transferred to six different cryptocurrency wallet addresses.
Kronos Capital halted its trading services to investigate the loss, but the funds were never recovered. They remained dormant for 6 months until one of the six wallets began transferring funds to Tornado Cash on May 7th.
The crypto analytics firm PeckShield raised an alert regarding the transfer of funds on X. They cited the transfer to Tornado Cash as an indication that the Kronos Research hacker was attempting to launder the stolen funds.
#PeckShieldAlert #KronosResearch Hacker 5: The labeled address has transferred 200 $ETH to #Tornadocash and approximately 1,314 $ETH (worth around $4 million) to a new address 0x164A…D5c4, and started laundering them via #Tornadocash#KronosResearch was hacked in mid-November… pic.twitter.com/7YOVuNpebd
— PeckShieldAlert (@PeckShieldAlert) May 7, 2024
How the Kronos Research Hacker Laundered the Funds
Tornado Cash is an open-source cryptocurrency tumbler, also known as a “crypto mixer.” This tool obscures the path of crypto transactions, making it extremely difficult to determine the original source of the funds.
Although created as a privacy tool, hackers often use these mixing services to launder stolen funds via decentralized exchange platforms.
The wallet first transferred 200 $ETH to Tornado Cash, then sent an additional 1,314 $ETH worth $4 million to a new address, as per Etherscan data.
From this new wallet, the Kronos Research hacker made 10 transactions of 100 ETH to Tornado Cash, rendering the stolen Ethereum untraceable.
Crypto Mixers Face Backlash From Governments
Crypto mixers have seen significant adoption in recent years. In October 2023 over $77 million in assets were processed through Tornado Cash contracts.
However, the majority of this adoption has been with illicit assets. Over the years, hackers have chosen crypto-mixing services over centralized exchanges as once they are identified, addresses are blocked by exchanges.
Tornado Cash bypasses this, as a way to legitimize their source of funds by removing connections to a hacked wallet or illicit crypto activity.
Almost all the top multi-million dollar crypto hacks have utilized Tornado Cash to launder the proceeds, as per an Arkham Intelligence report.
Something that prompted the US Treasury to impose sanctions on Tornado Cash in August 2022. As a result, its founders were charged with money laundering and sanctions violations a year later.
While opinions within the crypto community vary regarding the adoption of privacy tools, there is a consensus against the persecution of developers solely for creating an application.
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