Alleged Hacker Moves Tornado Cash Funds to Short BTC with 40x Leverage

On-chain activity has revealed a sophisticated financial maneuver involving funds previously processed through the privacy protocol Tornado Cash. According to data provided by on-chain analyst Ember (@EmberCN) on October 9, a suspected hacker transferred 263 ETH from the mixer to the decentralized perpetual exchange Hyperliquid. The move appears to be a calculated high-risk trade, as the individual utilized extreme leverage to bet against the price of Bitcoin (BTC).

Aggressive Shorting Strategy on Hyperliquid

The sequence of transactions began when the entity received the Ether from Tornado Cash, subsequently converting the assets into 643,000 USDC. These funds were then deposited into Hyperliquid, a decentralized platform known for its high-leverage trading capabilities. The actor utilized these deposits to open a massive short position of 305.5 BTC.

• The entry price for the short position was established at $67,068.
• The trader employed a maximum leverage of 40x.
• The total nominal value of the position is approximately $20.38 million.
• The liquidation threshold is set at $68,088.

Decentralized perpetual exchanges like Hyperliquid allow users to trade with significant leverage without the traditional KYC requirements found on centralized platforms, which often attracts participants seeking anonymity.

Market Implications and Current Standing

As of the latest reports, the high-stakes trade remains active. With Bitcoin currently trading slightly below the entry price, the address is holding an unrealized profit of approximately US$165,000. However, the extremely high leverage of 40x leaves the position highly vulnerable to market volatility. A price swing of less than 2% toward the $68,088 mark would trigger a total liquidation of the collateral.

"A wallet yesterday received 263 ETH from Tornado Cash, then sold it for 643,000 USDC and deposited it into Hyperliquid... The address opened a short position of 305.5 BTC", noted analyst Ember in their report.

This incident highlights the ongoing challenges faced by regulatory bodies regarding the use of privacy mixers and decentralized finance (DeFi) protocols. While Tornado Cash remains under heavy scrutiny by global authorities for its role in obfuscating transaction histories, the transition of these funds into complex derivatives trading represents a new layer of difficulty for blockchain forensics teams monitoring illicit financial flows.