They could have used something like wbtc, to bridge the bitcoin to Ethereum and then swap to eth to run it through tornado. But wbtc is a custodial wrapping service that would require kyc. There are other wrapping services that don't, but they have nowhere near that much liquidity on Ethereum to execute the trade to eth needed to run it through tornado.
The other problem is that tornado has limited liquidity itself. At the moment there is about $500M USD worth of eth in tornado. You would do yourself no good to dump a large multiple of that into the pool all at once.
Good points! Thorchain (a non-custodial service) claims 1.9B total swap volume. So, while not viable today for billions of dollars, the Bitcoin -> Thorchain -> Tornado Cash pathway seems to be viable for smaller amounts. Which doesn't necessarily bode well for recovering stolen bitcoin (and other crypto) in the future.
A thief still has to figure out how to convert crypto to fiat. But I am assuming that there are jurisdictions where this is possible without KYC.
I was thinking that there are probably thresholds that trigger alarms when large amounts of crypto are converted to fiat. If crypto is coming from a clean address, there is not evidence of illegal activity. But there is still the question of where those funds originated. So I am not sure if government entities can seize those assets...
They could have used something like wbtc, to bridge the bitcoin to Ethereum and then swap to eth to run it through tornado. But wbtc is a custodial wrapping service that would require kyc. There are other wrapping services that don't, but they have nowhere near that much liquidity on Ethereum to execute the trade to eth needed to run it through tornado.
The other problem is that tornado has limited liquidity itself. At the moment there is about $500M USD worth of eth in tornado. You would do yourself no good to dump a large multiple of that into the pool all at once.