Inferno Drainer Stops Attempt to Wash ETH – ‘Welcome’ to Railgun

Crypto privacy protocol Railgun, a built-in tool to screen out bad actors, appears to have foiled Inferno Drainer's latest attempt to launder stolen funds.

A July 9 attempt by Misttrack, who posted on X on July 9, to launder just over 174 Ether (ETH) – worth $533,000 at the current price – was blocked by Railgun, forcing them to send the stolen ETH to Inferno's main wallet. .

Railgun contributor Alan Scott Jr. told Cointelegraph that Inferno's malicious attempt to use the Ethereum-based privacy protocol was rejected by Railgun's Automated Proofs of Integrity (PPOI) system.

Once the PPOI system is open, “the tokens can only go back to the attacker's address – that's not acceptable in RAILGUN,” Scott said.

“This attacker can return tokens to the original wallet by design. This is part of the PPOI, this technology is new, but it's a great example that it works.”

Founded in January 2021, Railgun uses zero-knowledge (ZK) encryption to protect wallet accounts, transaction history, and transaction details, allowing users to run decentralized applications (DApps) on Ethereum or other blockchains while remaining private.

Railgun's PPOI system was launched in January 2023 by the protocol's researchers and contributors.

It uses cryptographic authentication to ensure that tokens entered into a Railgun smart contract are not from a list of known undesirable transactions or actors. To do this, users need to create ZK-proof that their funds are not in the predefined list of transactions and wallets.

Scott's PPOI system works by picking up transactions associated with malicious actors and then blocking the tokens from being processed by the protocol. The only option for the sender is to return the tokens to the original address.

“That transaction flow is traceable, and trying to use Railgun gives that actor zero privacy,” he said.

Inferno Drainer has stolen more than $180 million in crypto from more than 189,000 victims, according to Dune Analytics data.

Related: US Senators, FBI Do Not Oppose Crypto Privacy Rail Provider

In April, Railgun responded to claims from independent crypto reporter Colin Wu that the protocol was being used by the North Korean hacking syndicate Lazarus Group.

Ethereum founder Vitalik Buterin has defended the protocol, saying privacy is “normal” despite the US government calling Railgun a “main alternative to Tornado Cash” as a blockchain security institution after the US government imposed sanctions on the crypto mixer.

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