Recently, wallets linked to the CoinStats exploiter made a move that raised eyebrows in the crypto community. A staggering $1 million in Ether was transferred into the controversial crypto mixing protocol known as Tornado Cash. This significant transfer occurred not long after CoinStats announced that they were conducting investigations into the exploit.
The blockchain security firm CertiK flagged two wallets that were associated with the CoinStats exploit back in June. These wallets transferred a total of 311 ETH, which is equivalent to around $959,000, into Tornado Cash. It was revealed that one wallet moved 211 ETH, while the other transferred 100 ETH to the crypto mixer.
CoinStats first reported a security breach on June 22nd, where iOS users were targeted with a misleading notification promising a reward. The company promptly suspended its application to mitigate the breach and confirmed that only 1.3% of their total wallets were impacted, totaling 1,590 wallets. Despite this breach, CoinStats assured users that connected wallets and centralized exchanges remained secure.
In a recent update on July 5th, CoinStats mentioned that the security incident is still under investigation. However, the company did not reveal any additional details regarding the involvement of law enforcement authorities. The statement released by CoinStats indicated that they are dedicated to ensuring the security of their infrastructure and supporting any victims of the breach.
Despite legal challenges and crackdowns, Tornado Cash remains a popular choice for those looking to launder stolen funds. In 2022, the US Department of the Treasury blacklisted the service, prohibiting its use by US citizens, residents, and companies. This led to the shutting down of the project’s web domain and GitHub accounts. Developer Alexey Pertsev was arrested in Amsterdam on suspicions of involvement in criminal financial activities linked to Tornado Cash and was subsequently sentenced to over five years in prison.
The security breach in CoinStats resulting in the transfer of a substantial amount of Ether to Tornado Cash highlights the ongoing risks faced by users in the cryptocurrency space. It serves as a reminder of the importance of robust security measures and the need for continuous monitoring and investigation to prevent unauthorized access and misuse of funds.