While the Bitcoin ecosystem offers freedom from censorship in asset transfers, malicious individuals continue to move stolen funds by exploiting the network’s privacy. Prior to being sanctioned by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) in 2022, Tornado Cash was the preferred method for laundering stolen cryptocurrencies by hackers.
According to OFAC, since 2019, more than $7 billion in crypto assets have been laundered by malicious individuals using mixers. However, CertiK’s data from 2023 indicates that following the increased legal regulations on Tornado Cash, hackers are looking for new ways to move their illicitly obtained assets. More than $300 million of the revenues from the top 50 attacks in 2023 have been laundered through Bitcoin.
Crypto mixers are protocols used to keep crypto transactions private. This process anonymizes transfers between wallet addresses by mixing potentially identifiable funds with other large amounts of funds. Joe Green, head of CertiK’s rapid response team, pointed out that the decentralized nature and privacy of the Bitcoin ecosystem can empower both legitimate users and potentially benefit malicious individuals.
The shift towards Bitcoin mixers suggests that malicious actors are looking for ways to evade regulatory sanctions directed at platforms like Tornado Cash. CertiK analysis revealed that in 2023, the preferred tools of the notorious crypto hacker group Lazarus were Bitcoin mixers that have been sanctioned by OFAC.
According to the CertiK team, Bitcoin mixers use a different approach to anonymize transactions. Mixers on platforms like Tornado Cash obscure the link between the sender and receiver. However, the user can only withdraw the amount added to a new wallet for a fee. Bitcoin mixers, on the other hand, allow depositing Bitcoin and distributing it to a multitude of wallets in different percentages, which makes tracking much more complicated.