Coinbase Sees $1.67 Million in USDC Withdrawn for Money Laundering

On June 23, 2025, a series of 193 small withdrawals were made from Coinbase, totaling approximately $1.67 million in USDC. These funds were fragmented into multiple minor transactions, a tactic often used to avoid attracting attention or triggering automated tracking. The funds were then converted into ETH (Ether) and deposited into Tornado Cash, a privacy protocol known for mixing funds to obscure their origin and destination. This method is widely recognized as a money laundering tactic, as Tornado Cash breaks the linkage between sending and receiving addresses.

This incident was flagged by analytics researcher Zachxbt, who highlighted the use of on-chain mixers to anonymize illicit or privacy-focused transfers. Despite being sanctioned in some jurisdictions, Tornado Cash remains operational and continues to attract large capital flows. These fragmented withdrawals from reputable exchanges like Coinbase present a significant challenge for forensic analysis and regulation.

The broader implications of this event are significant. The use of privacy protocols like Tornado Cash raises concerns about heightened privacy versus the risk of illicit activity. Regulators are increasingly focused on tracing and limiting the use of mixers tied to large transfers. Exchanges like Coinbase may face more pressure to detect and prevent structuring through multiple small withdrawals. This case underscores the ongoing battle between privacy advocates and regulatory bodies in the cryptocurrency space.