Coinbase small withdrawals route $1.67M USDC via Tornado

Here's a revised version of the article, focusing on clarity, flow, and removing extraneous elements, while retaining the core information and the placeholders.

On June 23, 2025, blockchain analytics researcher Zachxbt alerted the community to a series of 193 small withdrawals from Coinbase. The transactions, totaling approximately $1.67 million USDC, were notably fragmented, rather than executed as a single, large transfer. This tactic of breaking down large sums into smaller transactions is often employed to evade detection or circumvent automated monitoring systems.

Funds Converted and Obscured

Upon arrival at a designated wallet, the USDC was promptly converted into ETH (Ether). Subsequently, the ETH was deposited into Tornado Cash, a privacy-enhancing protocol designed to obfuscate the origin and destination of funds through mixing. This method is commonly associated with money laundering, as Tornado Cash severs the link between the sender and recipient addresses.

Broader Implications for the Cryptocurrency Ecosystem

This incident underscores the continued use of on-chain mixers to anonymize both legitimate and illicit transfers. Despite sanctions imposed by certain jurisdictions, Tornado Cash remains operational, attracting substantial capital flows. The fragmented withdrawal strategy from established exchanges like Coinbase presents ongoing challenges for forensic analysis and regulatory oversight.

What This Means for Crypto Users

• The Privacy vs. Illicit Activity Dichotomy: While Tornado Cash offers privacy solutions, its association with illicit activities is a growing concern.
• Increased Regulatory Scrutiny of Mixers: Regulatory bodies are intensifying efforts to track and restrict the use of mixers, particularly in connection with large transfers.
• Enhanced Exchange Monitoring: Exchanges like Coinbase may encounter heightened pressure to identify and prevent structuring attempts through multiple small withdrawals.