Axie Infinity Hack... What has Happened to the Stolen Funds?

By Cje95 | Chronic Illness and Crypto | 28 Apr 2022


On March 23rd of this year, Axie Infinity suffered one of the largest hacks in crypto history. Worth between $600 to $625 million depending on the price of Ethereum a lot of people wondered if Axie would service and what had happened to the missing funds.

 

Since publicly admitting and owning up to the hack the creators behind the company (Sky Mavis) and the sidechain that was hacked have promised to make people who were affected by the attack whole. Binance and others have taken part in a fundraising round that has provided Sky Mavis with $150 million. These additional funds along with the cash from Sky Mavis' balance sheet are enough to cover the losses users suffered. 

 

So with the company able to withstand the hack and currently undergoing upgrades to their system to avoid future issues the next question is well what happened to the funds that were stolen? To answer that like most crypto hacks it is not as straightforward as one would hope. Interestingly enough so far only 17% of the stolen crypto has been laundered. 

 

To evade authorities and others who might be able to freeze the crypto the group converted everything into Ethereum and use a variety of cryptos to move the funds around. What has become apparent is the game of whack-a-mole to keep up with new wallets used to funnel these funds. Even when the government identifies and puts these wallets on the restricted/sanctioned list companies and organizations are failing to act.

 

Out of all of the issues I expected and anticipated law enforcement and the crypto community would run into I was extremely caught off guard by the role centralized stable coins have taken. Tether and USDC are very centralized and as such we have seen in the past these organizations freeze crypto transactions when they are going to sanctioned people or ill-gotten gains. Both of these organizations have failed in some pretty spectacular ways. USDC failed to freeze three wallets that were sanctioned including two linked to Russian hackers who were sanctioned for over two years before Coinbase and Circle acted. While according to the data Tether has been better they still allowed a $15,000 transaction to go through on a sanctioned wallet as recently as April 19th after the hack had occurred and was widely known! 

 

While the natural thing to do would be to go through Tornado Cash the North Korean hackers instead at first used centralized exchanges like Binance. This is how/why using the public blockchain the Government and Binance were able to trace and freeze over $5.8 million across 86 accounts. This is where blockchain and crypto can really shine as the ledgers are public so beating around the bush is much much harder. What's more, is that Tornado Cash with its new partnership might not be the go-to place it once was. By partnering with Chainalysis Tornado Cash will be able to tell if an incoming transaction is linked to these sanctioned wallets and prevent it from occurring. If this partnership works as is hoped it would really inhibit the ability of criminals to tumble their ill-gotten gains through the protocol. 

 

At the time of writing this the main wallet that was directly used still contained over $100 million worth of ETH. Etherscan has also joined in on the tracking efforts and now it is much much easier to follow the transactions of the group. Today in particular it appears they have been trying to split up the ETH into several large transactions and send them to brand new wallets. While it might work for now the issue this group will run into is now not only is the government and law enforcement after them but the crypto community overall is joining forces to track down these funds and isolate them as quickly as possible. By doing this it really hampers being able to turn the ETH into anything or send it to anyone of note. 

 

Please know I am not a financial advisor I am just someone who picked up on a trend and wanted to express it! Makes sure you always do your own research and never invest money you cannot afford to lose! If you enjoyed this article and would like to further support me below are a couple of referral links that if you used when signing up I would appreciate it! Also, follow me on Twitter @Cje95_

 

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Cje95
Cje95

Graduated from Texas A&M in May of 2020 had dabbled in crypto since 2017 but dove in at the end of 2019. December of 2020 packed up and moved to D.C.! Huge sports fan, space nerd, and international newsreader! Follow me on Twitter @Cje95_


Chronic Illness and Crypto
Chronic Illness and Crypto

Cryptocurrency and Blockchain are going to be a huge part of the future and no matter who tries it isn't going to be stopped! Here I try to give my best insight and thoughts into the latest crypto news, features, developments. Further, I look to discover any link to news from the United States ranging from social-political issues to stock market and economic data.

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