Tornado Cash $1.6 Million NFT Purchase
A CrypToadz NFT, valued at $1.6 million, was sold on OpenSea. The buyer's wallet was funded by Tornado Cash, a coin mixing service known for its anonymity.
On October 9, a CrypToadz NFT, representing a "small, warty, amphibious creature," was sold on the OpenSea market for 1,055 Wrapped Ethereum (wETH), equivalent to $1.6 million. This particular NFT is one of the 6,969 units created by the digital artist Gremplin. The CrypToadz collection, which debuted during the 2021 NFT surge, achieved a trading volume of $38 million in its initial 10 days on the market.
The price disparity between the typical value of a CrypToadz NFT and the $1.6 million transaction is huge. Just two weeks prior to this sale, the same NFT was acquired for 0.95 ETH, roughly $1,600. This means it was resold at a price a thousand times its previous value.
The wallet used to purchase the NFT was funded by another wallet that had been extracting money from Tornado Cash, an Ethereum coin mixing service. This service is known for its ability to anonymize transactions, making it challenging to trace the flow of funds. The new CrypToadz NFT owner received 1,115.9 ETH ($1.6 million) on October 5.
Tornado Cash's functionality allows users to obscure cryptocurrency transactions by pooling funds from various users, disrupting the public, on-chain flow of funds. Tornado Cash has been a popular tool among individuals looking to launder money. The United States even imposed sanctions on the crypto mixer in 2023 due to its alleged involvement in laundering crime proceeds.
Some believe that the buyer might have made a hurried error during the transaction process, leading to the excessive payment, coining it as the "Fat Finger" theory. Given the connection to Tornado Cash, there's speculation that this could be an instance of wash trading. This tactic involves executing a series of transactions to obscure the origin of funds, often for illicit purposes.
Oh geez this doesn't look good. A Cryptoadz NFT sells for $1,660,000 (1,055 ETH).
There were $41,500 in fees paid to OpenSea which makes me think it was a fat-finger error.
The floor price for the Toadz is 0.5 ETH.
ht @gangnam_eth pic.twitter.com/h8bPTCj2la — NFTstats.eth (@punk9059) October 9, 2023
The use of services like Tornado Cash, while providing privacy, can also be tools for money laundering. In July 2023, nearly $60 million in Ether, previously stolen from AnubisDAO, was moved using Tornado Cash. The individual holding the 13,556 ETH split and transferred the funds in 100 ETH transactions.
As of now, OpenSea, the platform where the CrypToadz NFT was purchased, has not commented on the transaction.