Recently, wallets associated with the CoinStats exploit were found to have moved nearly $1 million in Ether into the crypto mixing protocol Tornado Cash. The security firm CertiK flagged two wallets connected to the CoinStats exploit in June that transferred a total of 311 ETH to the controversial mixer. This movement comes in the midst of ongoing investigations into the security breach.
CoinStats reported a security breach on June 22nd that affected iOS users who received a misleading notification promising a reward. In response, the company quickly suspended its application to address the breach. Fortunately, only 1.3% of CoinStats total wallets, which amounts to 1,590 wallets, were impacted by the attack. CoinStats assured users that connected wallets and centralized exchanges remained secure amidst the breach.
As of the latest update on July 5th, CoinStats continues to investigate the security incident that occurred on June 22nd. The company is committed to taking rapid actions to secure their infrastructure and support any victims of the exploit. However, no specific details regarding law enforcement involvement in the investigation have been disclosed at this time.
Despite facing legal challenges and crackdowns, Tornado Cash remains a popular choice for laundering stolen funds. In August 2022, the US Department of the Treasury blacklisted the service, barring the use of Tornado Cash by US citizens, residents, and companies. As a result, the project’s web domain and GitHub accounts were shut down. Developer Alexey Pertsev was arrested in Amsterdam for his alleged involvement in concealing criminal financial flows and facilitating money laundering through the Ethereum mixing service, receiving a sentence of 5 years and 4 months in prison. Additionally, two more Tornado developers, Roman Storm and Roman Semenov, were charged with aiding $1 billion in money laundering, with Storm being arrested in Washington State.
The recent movement of funds into Tornado Cash from wallets associated with the CoinStats exploit raises concerns about the security of both platforms. Ongoing investigations by CoinStats and legal challenges faced by Tornado Cash highlight the importance of robust security measures in the cryptocurrency industry to protect users and prevent illicit activities.
