Since their inception, non-fungible tokens (NFTs) have been hailed as potential game changers in the financial landscape.
However, with any new technology comes risk. And, in the case of NFTs, that risk comes in the form of scams. One of the most prevalent forms of NFT scams is laundering.
One leading platform for laundering NFTs is Tornado Cash, an American mixer. According to a TradingPlatforms.com data presentation, 53% of all stolen NFTs are laundered through this platform.
According to TradingPlatforms’ financial expert Edith Reads, there are several reasons why Tornado Cash is popular for laundering NFTs. “Firstly, it is one of the most well-known mixers on the market, making it easy for criminals to use it to hide their tracks. Secondly, it offers high levels of anonymity, which makes it difficult for authorities to track down the perpetrators.”
Tornado Cash is no stranger to controversy. The US Treasury’s Office of Foreign Assets Control sanctioned the mixer for abetting crypto laundering early last month. The office alleges that Tornado Cash has facilitated the laundering of crypto assets exceeding $7-billion since 2019.
While the Treasury Department’s actions have caused some to question the legality of using Tornado Cash, the mixer remains a popular tool for those looking to hide their crypto holdings from prying eyes.
Critics argue that it enables criminals to launder money with impunity. However, supporters of the service say that it provides much-needed privacy for cryptocurrency users.
One of the most prominent users of Tornado Cash is the Lazarus Group, a North Korean state-sponsored hacking group that has been active since at least 2007. By funneling stolen funds through Tornado Cash, they can obfuscate the trail and make it much more difficult for authorities to trace the money.