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Tornado Cash Crash Updates
Last Updated: May 26, 2023
✓ Fact Checked
TORNADO UPDATES
The hacker that made Tornado Cash go through a tornado crash, has been withdrawing stolen funds from the TORN DAO daily.
The hacker still controls the DAO.
They previously proposed a "rollback" of the attack, but it was considered trolling and an attempt to pump the TORN token price before dumping tokens.
And it worked out, at least partially.
The TORN price spiked by 10% momentarily. It then retraced, but the final price remains higher than at the time of the hack.
The identity of the hacker and their motives are still unknown.
The loophole they exploited does not directly affect the service's protocol.
They have already "laundered" DAO funds: approximately $380,000 through Tornado itself.
Additionally, in the past week, another significant hacker emerged, targeting Yearn Finance (which had its old version hacked a month ago), who used Tornado Cash to transfer 2000 ETH ($3.7 million).
What's more...
During this week, there was another hearing in the case of Alexey Pertsev, who is behind the development of Tornado Cash mixer.
In the Netherlands, he is accused of facilitating money laundering through the service.
Pertsev insists that he has no connection to the activities on the platform, emphasizing his role as an open-source developer.
At the end of April, the court changed Pertsev's detention conditions from pretrial detention to house arrest.
He had been in prison since August of last year.
Pertsev was arrested shortly after Tornado Cash was included in the sanction list by the Office of Foreign Assets Control (OFAC) at the US Treasury.
Interestingly, the US Treasury compared Tornado Cash token holders (TORN) to terrorists from Al-Qaeda...
During the recent hearing, Pertsev's lawyer filed a motion to interrogate representatives of Chainalysis.
The materials from the analytical portal became part of the evidence when the Financial Crimes Investigation Service (FCIS) brought charges against the developer.
Surprisingly, the court granted permission for cross-examination. After the process concluded, Pertsev's lawyer, Kit Cheng, commented on this decision:
"To be honest, I'm satisfied. If we have a problem with a burger, why go to the laboratory? Let's go to the meat processing plant. Just ask what it's made of."
According to Cheng, FCIS did not provide compelling evidence that Pertsev was involved in money laundering schemes through the mixer.
It seems that Alexey has a real chance to clear his name, considering blockchain analysts' wealth of data and expertise!
Unfortunately, the legal process is expected to be prolonged.
The next hearing is scheduled for September of this year, and a final decision is unlikely before the first half of 2024.
TL;DR: Hacker withdraws stolen funds from TORN DAO daily. Their identity and motives remain unknown. In the meantime, developer of Tornado Cash faces money laundering charges. Legal process expected to be prolonged, next hearing in September 2023.
DAO IMPROVEMENTS
All of this mess with Tornado DAO indicates that there's a problem, since incidents like this show that there's a recurring pattern. Key DAO elements will change, and they may change suddenly.
The change is, actually, already happening.
The a16z Crypto project has released the open-source code of the Solidity Cicada library.
It utilizes time-lock encryption and ZK technology for on-chain voting, ensuring greater anonymity.
Here's how it's explained:
"On-chain voting has its drawbacks, including confidentiality issues. In most WEB3 protocols, on-chain voting results are fully public. Without privacy, the results can be manipulated. However, on the other hand, such transparency influences voters' opinions, which can lead to undemocratic outcomes."
The Cicada tool introduces new privacy features.
For example, there will be secret voting (Australian ballots).
This means that participants do not see the percentage of "for" and "against" votes while the voting is still ongoing.
Thus, they will vote based on their own opinions rather than relying on the majority.
Cicada also offers complete anonymity to voters while allowing individuals to verify if someone has voted on their behalf.
The system differs in a way that there will be no receipts or other voting confirmations, minimizing cases where a person receives a reward for voting for a specific proposal.
The tool can be used in the main Ethereum network, and therefore, in all similar EVM networks in the future.
That's how it goes! Have a great weekend!
TL;DR: Tornado DAO incidents highlight recurring problems which will have to be solved. The a16z Crypto project introduces Cicada, an open-source library for secure on-chain voting with greater anonymity. Cicada offers secret voting, complete anonymity, and verification of votes.
ANSWER TO YESTERDAY'S QUIZ
Yesterday we asked you to find that hidden Bitcoin.
Seems like you, folks, do like this type of puzzles!
Anyway, congrats to those who managed to find that hidden treasure.
For those who couldn't find it, it was tenderly placed right here:
SELECTED MEME OF THE DAY
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