Truebit hacker launders $26.36 million, Tornado Cash becomes a tool for money laundering again

The Truebit security incident has entered a new phase. On January 11th, hackers completed money laundering of the stolen 8,535 ETH (worth approximately $26.36 million) through Tornado Cash mixing services, significantly increasing the difficulty of tracing the funds. From the protocol being hacked on January 9th, to the transfer of funds on January 10th, and finally to the completion of mixing today, the entire process took no more than 48 hours.

Hacker’s “Escape Route”

Event Timeline

Based on publicly available information, the execution of this attack was clear and efficient:

The Role of Tornado Cash

Tornado Cash is the most well-known privacy mixing service in the Ethereum ecosystem. The hacker chose to process the stolen funds through it for very straightforward reasons:

• Breaking on-chain traceability: Although blockchain transactions are transparent, Tornado Cash mixes funds from multiple users via smart contracts, making deposit and withdrawal addresses uncorrelated.
• Hiding large transactions: Large stolen sums like $26.36 million are broken into multiple smaller withdrawals after mixing, further reducing the risk of detection.
• Time advantage: The hacker completed the entire process—from theft to mixing—within 48 hours, ahead of the deployment of more defensive measures.

Market Reaction and Double Blow

This incident has dealt a devastating blow to the Truebit ecosystem. According to the latest data, the TRU token plummeted from $0.16 to nearly $0, a drop of over 99.95%. This not only reflects the severity of the security breach but also exposes several issues:

• Collapse of investor confidence: The extreme decline in token price indicates that market perceptions of the project’s prospects have completely changed.
• Liquidity depletion: Uniswap’s daily fee revenue once reached $1.4 million, with TRU contributing about $1.3 million, reflecting a rush of investors selling off.
• Ecosystem risk: Applications and users relying on Truebit may face risks, further undermining the credibility of the entire ecosystem.

Law Enforcement and Regulatory Challenges

Tracking Difficulty Significantly Increased

The Truebit team has stated they have contacted law enforcement agencies, but the reality is—once the mixing is complete, it becomes extremely difficult to trace the funds using traditional on-chain analysis. Challenges faced by law enforcement include:

• Tornado Cash’s design inherently aims to evade tracking.
• Post-mixing funds can be dispersed across multiple addresses, further dispersing risk.
• Hackers can withdraw funds from the mixing service at any time and transfer them to any exchange or wallet.

The Contradiction Between Privacy Tools and Regulation

This incident has reignited a long-standing debate: the legitimacy of privacy tools. Tornado Cash itself is a legitimate decentralized application, but it has been frequently used for money laundering. The U.S. has sanctioned Tornado Cash, but this has not prevented hackers from using it. This indicates:

• Platform sanctions alone have limited effectiveness.
• There is a fundamental contradiction between privacy protection and anti-money laundering regulations.
• More technological and policy innovations are needed to balance both.

Summary

The progress of the hacker laundering the stolen funds through Truebit marks a shift from “whether funds can be recovered” to “almost impossible to recover.” This is not only a fatal blow to the Truebit project but also further demonstrates the effectiveness of privacy mixing tools in concealing fund flows. For investors, this serves as a warning: even seemingly promising infrastructure projects can be compromised by a single smart contract vulnerability. For the entire industry, the challenge of balancing privacy protection and crime prevention remains an unresolved issue.