The US has sanctioned a “crypto mixing” service used in a North Korea-backed heist, in the latest sign of how financial watchdogs are stepping up their efforts to stamp out money laundering through digital currencies.
The Treasury department on Friday unveiled measures against Blender.io for its role in helping a hacking group sponsored by North Korea launder $20.5mn in “illicit proceeds” from one of the biggest-ever crypto heists.
Friday’s announcement highlights how US enforcement agencies are more closely scrutinising the flow of funds across digital assets for signs of illicit activity. Mixers are a particular source of concern because they obscure the trail of transfers that would typically be publicly accessible on the digital ledgers that underlie cryptocurrencies.
“Virtual currency mixers that assist illicit transactions pose a threat to US national security interests,” said Brian Nelson, under secretary of the Treasury for terrorism and financial intelligence.
US sanctions are a particularly powerful tool because of America’s central position in the global financial system. The measures implemented on Friday are designed to stem the movement of funds to and from Blender.io.
Blender.io has facilitated the transfer of over $500mn worth of Bitcoin since its inception five years ago, according to Treasury. The group “operates on the Bitcoin blockchain and indiscriminately facilitates illicit transactions by obfuscating their origin, destination, and counterparties.”
An email seeking comment from Blender.io was returned as undeliverable.
The mixer supported North Korea-backed Lazarus Group’s efforts to launder the proceeds generated from a recent hack against a crypto network used by Axie Infinity, a popular play-to-earn crypto game, Treasury said. The hacking group is accused by the US of stealing almost $620mn in crypto assets.
Beyond North Korea, Treasury said Blender.io facilitated money laundering activity for the Russia-affiliated ransomware group Conti, among others. This comes in the wake of widespread concern surrounding the crypto industry’s role in Russian sanctions evasion.
The sanctions against Blender.io are also indicative of the US government’s broader ambitions to crack down on illicit crypto activity.
“While [Treasury] has targeted laundering services used by hackers, ransomware operators, and other illicit actors in recent months, this is the first designation of a mixer, indicating an advancement in their strategy to dismantle crypto money laundering infrastructure,” Andrew Fierman, head of sanctions strategy at Chainalysis, said.
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