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A hacker involved in the zkLend incident has claimed to have lost stolen Ethereum to a phishing site masquerading as Tornado Cash. This revelation raises concerns about the security of funds in the decentralized finance space and the tactics employed by cybercriminals.
In December 2024, the crypto industry faced 25 hacks, resulting in losses of $24.7 million, a 71% decrease from the previous month. Major breaches included a $12.38 million theft from LastPass and $2.2 million losses at Yeifinance and GemPad, highlighting ongoing vulnerabilities in DeFi platforms. Despite the decline in losses, the need for improved security measures remains critical as the sector looks toward a more secure future in 2025.
The Australian Securities and Investments Commission (ASIC) has initiated legal action against Binance Australia Derivatives for allegedly misclassifying over 500 retail clients as wholesale investors, thereby denying them essential consumer protections. Meanwhile, Interpol has issued a Red Notice for Hex founder Richard Heart, wanted for alleged tax fraud and assault. In South Korea, lawmaker Kim Nam-kuk faces a six-month jail sentence for failing to report his full cryptocurrency holdings, reportedly concealing significant assets.
In a discussion with Amanda Tuminelli, chief legal officer of the DeFi Education Fund, the implications of U.S. money transmission laws on crypto developers are examined, particularly in light of cases like Tornado Cash. Tuminelli highlights the risks associated with Section 1960, emphasizing the critical nature of custody and control, while noting that varying legal interpretations are fostering uncertainty in the crypto innovation landscape.
Roman Storm, co-founder of Tornado Cash, has filed a motion to dismiss criminal charges against him, citing a recent Fifth Circuit Court ruling that deemed sanctions on the platform's smart contracts unlawful. His defense argues that he had no control over these autonomous contracts, which undermines the government's case related to the International Emergency Economic Powers Act. Storm's legal team contends that the nature of the smart contracts absolves him of liability for money laundering and unlicensed money transmission charges, asserting that the government's interpretation of the law violates due process.
Irfan Shaik, founder of Interstate, proposes that regulators could target Ethereum's validators to enforce compliance, noting that major builders have censored transactions. Meanwhile, Tornado Cash co-founder Roman Storm seeks to dismiss charges after a Fifth Circuit ruling deemed sanctions against immutable smart contracts illegal, emphasizing that developers cannot control their use. This ruling has sparked optimism among privacy advocates and decentralized protocol supporters.
Roman Storm, co-founder of Tornado Cash, has requested a federal judge to dismiss his criminal charges following a Fifth Circuit Appeals Court ruling that deemed sanctions against the platform's smart contracts unlawful. Storm argues that the court's opinion undermines the charges of conspiring to violate the International Emergency Economic Powers Act, asserting that the smart contracts are not property of any foreign entity and cannot be sanctioned. He also contends that Tornado Cash is not a financial institution, further challenging the charges of operating an unlicensed money-transmitting business and money laundering conspiracy.
A Texas man, Frank Richard Ahlgren III, was sentenced to two years in prison for underreporting over $1 million in capital gains from Bitcoin sales totaling $4.35 million. He misled his accountant and used various techniques to conceal his profits, including cash exchanges and crypto mixers. This case marks the first U.S. criminal tax evasion prosecution focused solely on cryptocurrency.
In late November 2024, a US court lifted OFAC sanctions against Tornado Cash, a decentralized mixer protocol, while co-founder Roman Storm faces serious criminal charges, including money laundering. The court ruled that immutable smart contracts are not classified as "property," challenging regulatory frameworks and highlighting the need for updated approaches to blockchain technology. Despite ongoing legal issues, Tornado Cash continues to gain traction in the decentralized finance space.
Funds stolen from DEXX have been traced to Tornado Cash, with around 1,000 ETH deposited into the privacy-focused mixer. This raises concerns about the ability to track illicit funds, highlighting the ongoing challenges in recovering stolen cryptocurrency assets. Stakeholders are urged to enhance security measures to prevent future thefts.
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