Inferno Drainer, a notorious wallet-draining group, attempted to launder $530,000 worth of stolen ETH through the crypto privacy protocol Railgun but was thwarted by Railgun's built-in tool, Private Proofs of Innocence (Private POI). The system detected and blocked the transaction, forcing the return of the stolen ETH to Inferno Drainer's original wallet. Railgun, which uses zero-knowledge cryptography to ensure privacy, was able to prevent the misuse of its platform despite Inferno Drainer's efforts. This incident highlights the effectiveness of Railgun's security measures against such malicious activities.

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Crypto privacy protocol Railgun’s built-in tool to filter out bad actors has seemingly foiled Inferno Drainer’s latest attempt to launder its stolen cash. In a July 10 post to X, MistTrack noted that a July 9 attempt to launder a little over 174 Ether (ETH) — worth $533,000 at current prices — was blocked by Railgun, forcing them to send the stolen ETH back to Inferno’s original wallet address. Railgun contributor Alan Scott Jr told Cointelegraph that Inferno’s malicious attempt to use the Ethereum-based privacy protocol was rejected by Railgun’s automated Private Proofs of Innocence (Private POI) system. Once the Private POI system was activated, “the tokens could only return to the attacker’s address — they were not welcome in RAILGUN,” said Scott. “The fact that this attacker could only send tokens back to the original shielding wallet is by design. This is part of Private POI, this technology is brand new, but this a great example that shows it works.” Railgun, founded in January 2021, uses zero-knowledge (ZK) cryptography to shield wallet balances, transaction history, and transaction details allowing users to use decentralized apps (DApps) on Ethereum or other supported chains while remaining private. Railgun’s Private POI system was launched by the protocol’s researchers and contributors in January 2023. It uses cryptographic assurance to ensure that tokens entering the Railgun smart contract are not from a known list of undesirable transactions or actors by requiring users to create a ZK-proof that their funds are not part of a pre-set list of transactions and wallets. Scott explained the Private POI system works by picking up transactions linked to nefarious actors and then blocking the tokens from being processed through the protocol. The only option available to the sender is to withdraw the tokens back to the original address. “That transaction flow remains trackable, and attempting to use RAILGUN provides zero privacy to that actor,” he said. Inferno Drainer has stolen over $180 million in crypto from over 189,000 victims since its inception in August 2023, per Dune Analytics data . Related: US senators, FBI aren’t opposed to crypto privacy: Railgun contributor In April this year, Railgun hit back at claims stemming from independent crypto reporter Colin Wu, after he alleged the protocol had been used by the North Korean hacking consortium Lazarus Group. Despite blockchain security firm Elliptic labeling Railgun a “prime alternative to Tornado Cash” after the US government imposed sanctions against the crypto mixer — Ethereum co-founder Vitalik Buterin has defended the protocol on the grounds that privacy is “normal.” X Hall of Flame: Ethereum’s recent pullback could be a gift — Dynamo DeFi 

Railgun Thwarts Inferno Drainer's $530K ETH Laundering Attempt