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Why a $1.6 mln NFT sale linked to Tornado Cash has raised eyebrows

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A recent NFT sale on the OpenSea platform has raised questions due to concerns over its association with Tornado Cash.

Why a $1.6 mln NFT sale linked to Tornado Cash has raised eyebrows

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  • The user spent substantially more on the NFT than its usual price.
  • Tornado Cash remains a sanctioned crypto mixer in the U.S. due to it being linked to money laundering.

A recent sale of a Non-fungible Token [NFT] on the OpenSea platform has raised eyebrows due to concerns over money laundering.

A user recently purchased a CrypToadz NFT for $1.6 million in 1,055 Wrapped Ethereum [wETH] on OpenSea. The user also paid the NFT trading platform a fee of $42,000 in wETH.

Note that the user spent substantially more for the NFT than what it is priced at. On OpenSea, a CrypToadz NFT trades for $835-$950. The sale of such a high value has created a lot of buzz online, given that the demand for NFTs has drastically dropped due to lowered prices.

Many users on crypto X (formerly Twitter) speculated that it could be a case of a “fat finger” error, in that the user might have accidentally paid much more than intended.

However, a Twitter user revealed that the purchasing wallet was funded by a wallet that has been withdrawing funds from Tornado Cash.

The aforementioned wallet recently received funds in crypto worth $1.76 million from another wallet. This other wallet received funds in crypto worth $1.9 million from the crypto mixer Tornado Cash in September.

Tornado Cash — a sanctioned crypto mixer

Tornado Cash is an automated service that allows users to hide the flow of crypto funds to and from wallets by pooling funds from multiple users. This disrupts the public, on-chain movement of crypto funds between wallets, making it more difficult to track fund transfers.

In August 2022, the Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash. The enforcement prohibited U.S. residents from engaging with the crypto mixer. The U.S. Treasury Department stated at the time that the mixer provided a platform for,

“Proceeds of cybercrimes, including those committed against victims in the United States.”

In October 2022, the non-profit Coin Center in Washington, DC, sued the Treasury over the measure. Tornado Cash, according to the plaintiffs, preserves their right to privacy.

A group of Coinbase [COIN]-backed plaintiffs also sued the Treasury in May 2023. According to the plaintiffs, the U.S. sanction on Tornado Cash is an infringement on free speech and a violation of the First Amendment.

Privacy proponents have consistently said that Tornado Cash allows them to transact cryptocurrency without any fear of surveillance.

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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