A seven-figure sale of a CrypToadz NFT on Ethereum wasn’t all that surprising during the market mayhem of late 2021. But such a sale today, amid significantly weakened demand for NFT assets, is sure to stand out. And today’s $1.6 million purchase of a CrypToadz NFT is raising some red flags, too, thanks to a connection to Tornado Cash.
CrypToadz #4030 was purchased today on the OpenSea marketplace for 1,055 Wrapped Ethereum (WETH), or more than $1.6 million worth. The buyer also paid OpenSea a fee of almost $42,000 worth of ETH on top of the base price.
The amount paid is dramatically more than the typical going rate for a CrypToadz NFT. Currently, they start at 0.53 ETH (about $835) on OpenSea, with the best listed offer on that particular NFT coming in a little higher at just below 0.6 ETH ($940). In other words, the buyer paid well above the market rate for this profile picture (PFP) project.
The purchasing wallet was funded by a wallet that has been pulling money out of Tornado Cashhttps://t.co/nNhKvSVhoz pic.twitter.com/aInHO8vNyG
— TexasHedge (@0xTexasHedge) October 9, 2023
Initially, Crypto Twitter commenters pointed to a “fat finger” mistake—that the buyer may have zipped too quickly through the process and accidentally paid far more than intended. We’ve seen apparent examples of this on the other side, too, where sellers have accepted bids that were well below the market price for a particular collection.
However, a bit more digging reveals another potential answer: wash trading.
See, the wallet that purchased the CrypToadz NFT today was recently funded with about 1,116 ETH (about $1.76 million) from another wallet—and that wallet received about 1,200 ETH (almost $1.9 million) from Ethereum coin mixing service Tornado Cash in September.
Tornado Cash is an automated service that lets users obscure the flow of cryptocurrency to and from wallets by mixing funds from various users into a pool. That breaks the public, on-chain flow of cryptocurrency between wallets, making it more difficult to trace how ETH is being sent around.
Privacy advocates say that Tornado Cash lets them transact cryptocurrency with less fear of surveillance, but authorities have called it and similar tools a way to launder money. The service was banned in the United States following Treasury Department sanctions in 2022.
Given the use of Tornado Cash to funnel substantial amounts of ETH into the funding wallet, this may indeed be an attempt at wash trading or money laundering by the buyer, using an NFT purchase to further complicate the flow of funds between crypto wallets and assets. On the other hand, use of Tornado Cash does not necessarily imply illegal actions or intent.
OpenSea did not immediately respond to a request for comment.