Security firms, Peckshield and CertiK, confirm that $500,000 worth of DAI stablecoins was laundered through Tornado Cash on September 9, 2022. The report shows that the funds were from the DAO Maker platform that was hacked in August 2021.
Tornado Cash is an open-source, non-custodial platform that enables private transactions by obfuscating details of transactions.
Tornado Cash uses multiple smart contracts and Zero Knowledge Proof systems to break links between transactions. Therefore, ensuring the privacy of transactions.
This privacy functionality has made the decentralized platform the spot for most fraudulent acts. Stolen funds are transferred into Tornado Cash and redistributed without traceable links.
US sanctions Tornado Cash
In August 2022, the US Treasury sanctioned Tornado Cash for allowing the laundering of over $7 billion in virtual assets. This has been linked with cyberterrorists like the Lazarus Group.
Despite the sanctions, records show that the platform is still a destination for crypto users.