Presenters at the ongoing AxieCon 2022 conference broke the news of the recovery, saying that U.S. authorities will gradually move the funds into Axie Infinity’s treasury, which will reach the player community. However, they warned that it could take several years for the process to play out.
What We Know About the Lazarus Hacking Group
In March of this year, the Lazarus Group breached the Ronin Network, stealing cryptocurrencies valued at over $600 million at the time. The recovered funds represent just 10% of the stolen amount (taking into account current prices). However, Chainalysis’ Erin Plante said the seizure is a positive sign. It is now becoming more difficult for bad actors to cash out stolen funds. Lazarus is a hacking group with links to North Korea. Since 2021, the Lazarus Group has actively targeted American media outlets with phishing campaigns. Some of its members have even been added to the FBI’s Cyber’s Most Wanted list. Plante said that North Korean groups, and “especially elite hacking units like Lazarus Group” are behind most of the crypto heists on DeFi protocols. “This marks the first time ever that cryptocurrency stolen by a North Korean hacking group has been seized, and we’re confident it won’t be the last,” Plante said on the Chainalysis blog.
Sanctions on Tornado Cash Led to Seizure of Stolen Funds
The group was known to rely heavily on the Tornado Cash mixer to launder stolen crypto. One of the defining characteristics of cryptocurrencies is traceability. Every transaction is recorded on the blockchain. This allows anyone to examine the blockchain and trace every transaction. The blockchain does not reveal any information apart from the wallet address. Those seeking even more financial anonymity use tools such as mixers. A mixer works very much as it sounds — it allows users to deposit crypto into a large pool of funds, which have varying origins. It shuffles deposited funds into a larger pool, and returns the amount to the user. This makes it difficult to trace transactions. Tornado Cash fell into the U.S. Treasury’s bad books due to the Ronin Network hack. The agency sanctioned and banned the use of Tornado Cash. This led to the Lazarus Group using other tools to launder their money, such as using different DeFi protocols to chain hop. However, with the help of Chainalysis, law enforcement managed to trace some of the cross-chain fund movements.
