Renowned crypto analyst ZachXBT has managed to identify the hacker behind the massive breach of the blockchain project Bittensor in 2024, which resulted in the theft of TAO tokens worth approximately $28 million. Despite the use of the anonymizing mixer Railgun, the researcher was able to trace the criminal flows and deanonymize the suspect.
This is reported by Business • Media
Using Heuristics to Identify Transactions
ZachXBT applied his own analysis method, combining time and amount heuristics, which allowed him to link anonymous transactions and determine the flow of funds. Among the identified addresses were those involved in laundering assets through NFTs and various mixers.
According to the analyst, after the hack, the perpetrators initially transferred the tokens through fast exchanges, converting them into Monero. Then, about $5 million was sent to Railgun in the form of Ethereum, USDC, and WETH. Railgun, like Tornado Cash, is positioned as a tool for anonymous transactions, but it is often used to conceal illegally obtained funds.
He stated, “Unique denominations and short intervals between transactions provide reliable demixing.”
Identifying the Suspect and the Role of NFTs
Further investigation revealed that the assets were distributed across three wallets, which were then used for NFT transactions in an anime style. ZachXBT notes that wash trading of NFTs is rarely used for money laundering; however, this method helped the criminals conceal the chain of transfers.
One of the addresses was linked to a Bittensor user under the pseudonym Rusty, the creator of the project “Skrtt racing,” which involved accepting cryptocurrency bets on toy Hot Wheels races. As a result, it was established that the owner of this address is an individual known as Ayden B, mentioned in the lawsuit. Although he denied involvement in the hack, he confirmed ownership of the wallets that participated in the suspicious transactions.
ZachXBT hopes that the collected evidence will serve as the basis for initiating a criminal case against the organizers of the crime.