Blockchain investigator ZachXBT has flagged a suspicious crypto transaction trail involving $1.67 million in USDC withdrawn from Coinbase and funneled through Tornado Cash, a privacy-focused Ethereum mixer.
The activity, which occurred on June 23, has raised fresh concerns about the use of centralized exchanges to mask illicit fund flows.
According to Coinlive, the funds were withdrawn in 193 small transactions over a 90-minute window.
The address in question then converted the entire amount into ETH before depositing it into Tornado Cash, a tool often used to obscure the origin and destination of crypto assets.
Suspicious Coinbase Withdrawals Raise Red Flags
The pattern of withdrawals—frequent, small, and rapid—suggests an attempt to avoid detection by automated compliance systems. While Coinbase has not issued a public statement, the incident highlights the ongoing challenge of on-chain anonymity tools being used to launder funds originating from regulated platforms.
ZachXBT, known for his meticulous blockchain forensics, noted that the address involved had no prior transaction history, further amplifying suspicions. The use of Tornado Cash, which remains under U.S. Treasury sanctions, adds a layer of legal and regulatory complexity to the case.
Tornado Cash Remains a Laundering Hotspot
Despite being sanctioned in 2022, Tornado Cash continues to be used by hackers and fraudsters to obfuscate crypto trails. In this case, the ETH was deposited into the mixer shortly after conversion, making it difficult to trace the funds beyond that point.
This incident follows a broader trend of rising crypto-related fraud. In fact, Coinbase users reportedly lose over $300 million annually to social engineering scams, according to CryptoSlate.
What’s Next?
While no official investigation has been announced, the transparency of blockchain data means that forensic analysts like ZachXBT continue to play a vital role in exposing suspicious activity. The case underscores the need for stronger compliance tools and real-time monitoring on centralized exchanges.
