Imagine you have $X million from a hack on wallet A, and you want to launder it. First, you run it through tornado cash (RIP) a few times and move them to wallets B1 to B1000. Then, you mint an "exciting NFT collection" on your public, KYC'd wallet C, list them on a "decentralized exchange", and have wallets B1 to B1000 buy those NFTs. Even better, seeing how fast your NFTs are selling out, a few suckers join in on the stampede and get mixed in alongside B1-B1000. Well, now on wallet C you have $(X - gas fees - minting fees) etc., that is totally legal and clean. You cash out on Coinbase, give the taxman his due, and you are good to go!
The Tornado Cash tumbler allows you to create sort-of-Sybils so it looks organic. The no-KYC Dex allows you to push from a no-KYC account to a KYC'd account.
The KYC'd account lets you withdraw fiat.
I see. Okay, each of the pieces are necessary. Thanks for the explanation.
> Well, now on wallet C you have $(X - gas fees - minting fees) etc., that is totally legal and clean.
It's not "legal" at all, because it's still proceeds of crime. Although it may "appear" legal and be very difficult to trace back to the source, it's still not actually legal.
