By 2023, more than $300 million of stolen crypto assets will reach Bitcoin miners
While Bitcoin's decentralization provides the freedom to move assets without censorship, malicious actors are also taking advantage of the network's inherent privacy to move stolen funds.
In the year Before sanctions were imposed by the US Treasury Department's Office of Foreign Assets Control (OFAC) in 2022, Tornado Cash was the first choice for hackers to fake stolen crypto. According to OFAC, more than $7 billion in crypto assets have been seized using the mixer since 2019. However, new findings by blockchain security firm CertiK show that change is expected in 2023.
According to data analyzed by CERTK, more than $300 million of the proceeds from the 50 largest exploits seen in 2023 were completed in Bitcoin.
Crypto hashes are protocols used to personalize crypto transactions. The tool combines identifiable funds with a myriad of other funds to anonymize transfers between wallet addresses.
Joe Greene, head of Certike's rapid response team, told Cointelegraph that while Bitcoin's decentralization and privacy encourage legitimate users, malicious actors can use it to their advantage. Green explained:
“The Bitcoin ecosystem hosts a variety of privacy secrets that serve both privacy-conscious users and those with ulterior motives. […] While this situation poses a challenge, it is important to recognize that it is an inherent feature of decentralized systems.
The switch to Bitcoin (BTC) mixing means that malicious actors are trying to find a way to get rid of Tornado Cash due to regulatory sanctions. Certike's analysis shows that Bitcoin miners like Sinbad, who were sanctioned by US authorities in 2023, are the tool of choice for the notorious crypto hacking group Lazarus.
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According to CertiK, Bitcoin mixers use a different method to anonymize transactions. With mixers like Tornado Cache, the mixer hides the communication between the sender and receiver. However, the user can only withdraw the same amount that they have deposited in the new wallet minus the fee.
On the other hand, bitcoin mixing allows users to deposit bitcoins and distribute them at different percentages across multiple wallets, further complicating tracking.
While Tornado Cash remains the “go-to” hybrid for small-scale cybercrime, Seric highlighted that incidents of $50 million and above are moving toward Bitcoin-based counterfeiting solutions. CertiK believes that this may be a trend and a preview of the challenges ahead for the crypto space.
As crypto-encryption methods continue to improve, there is an urgent need for more flexible countermeasures in the fight against blockchain-based financial crimes. Green explained:
“Perhaps the most effective preventive measure is to monitor the activities of ‘dirty' money. Sharing information with entities such as exchanges is also an important step.
In addition, the security expert believes that it is important to know the strategies used by the stakeholders in order to be able to deal with them.
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