Hackers exploited anime‑themed NFTs to launder proceeds from the $28 million Bittensor hack, traced by blockchain analyst ZachXBT from privacy tools and Avalanche bridges.
The laundering tactic highlights vulnerabilities within NFT markets, prompting regulatory concerns and market shock as stakeholders demand stricter anti‑money‑laundering measures.
Criminals involved
Criminals involved in the $28 million Bittensor hack laundered funds through anime‑themed NFTs, using wash‑trading techniques to obscure transactions. Blockchain analyst ZachXBT traced the funds through privacy mixers and Avalanche bridges linked to specific NFT transactions.
ZachXBT connected the laundered funds to addresses associated with former Opentensor engineer “Rusty.” Despite ownership admissions, Rusty, legally identified as Ayden B., denied involvement in the hacking itself, fueling ongoing investigations and legal actions.
The hacking event influenced the Bittensor market, impacting holders and creating a security‑aware wave. Around $100,000 passed through overvalued anime NFTs, illustrating blockchain’s evolving laundering tactics and casting shadows on available regulatory measures.
The fallout led to a noticeable drop in Total Value Locked (TVL) for Bittensor and instigated broader market anxiety. TAO tokens were drained, with the operation using ETH and Avalanche for laundering across various networks.
The incident has attracted steeper regulatory scrutiny towards NFT markets, alerting entities like the SEC and the EU’s MiCA to potential laundering patterns within crypto. ZachXBT remarked, “It’s extremely rare to see exploits/hacks involve NFT wash trading.”
This event highlights the nascent use of NFTs in sophisticated laundering operations, marking it as a critical point in crypto forensics and regulatory concerns. It serves as both a cautionary tale and a call to action for enhanced protective infrastructures.