On-chain investigator ZachXBT has alleged that decentralized exchange aggregator Tokenlon processed millions of dollars in crypto tied to suspected illicit activity. In a new thread on X, he claimed that Tokenlon repeatedly handled funds linked to hacks, fraud schemes, and government-seizure wallets with limited visible compliance responses.
According to his posts, ZachXBT reviewed dozens of transactions that moved funds from high-risk wallets through Tokenlon’s smart contracts. He argued that this pattern showed a longer-term compliance gap rather than a single oversight. However, he also noted that his findings are based on public blockchain data and have not been tested in court.
How the $90M Illicit Crypto Case Connects to Tokenlon
The claims come soon after ZachXBT’s separate investigation linking a user known as “John” or “Lick” to over $90 million in suspected illicit crypto funds. In that case, he traced flows from fraud and theft schemes into a network of wallets that allegedly routed assets through exchanges, bridges, and instant swap services.
Part of those funds reportedly came from U.S. government-controlled wallets holding assets seized in the 2016 Bitfinex hack. ZachXBT said some of the same laundering patterns, such as splitting, cycling, and reconsolidating funds, also appeared in flows that later interacted with services like Tokenlon.
He argued that repeated exposure to such flows should push service providers to strengthen monitoring and reporting.
Compliance Questions Around Decentralized Routing
ZachXBT discussed how non-custodial or semi-decentralized services might still be crucial to money laundering chains in his most recent postings. It may be more difficult to distinguish between clean volume and high-risk funds when transferring between wallets, as Tokenlon routes trades across on-chain liquidity providers.
However, distinct trends in timing, counterparties, and address histories might have been early warning signs, according to ZachXBT.
Mixers, cross-chain bridges, and fast exchange tools are becoming frequent stops on laundering routes, according to reports from analytics companies like TRM Labs. They clarify that, to sever the obvious connection to the original crime accounts, criminal actors frequently transfer funds through a combination of centralized exchanges, non-custodial services, and DeFi protocols. In that regard, detractors contend that aggregators like Tokenlon require more stringent screening and open answers when they identify questionable flows.
As of this writing, the team has not provided a thorough rebuttal, and the accusations against Tokenlon have not yet resulted in any public enforcement measures.
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