U.S. Government Adds Crypto Service to Sanctions List for Helping North Korea Launder Funds

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Bitcoin
U.S. Government Adds Crypto Service to Sanctions List for Helping North Korea Launder Funds

Today, the U.S. Department of the Treasury has issued the first-ever sanction on a cryptocurrency service.

What is Blender?

The department said it had added the virtual currency mixer Blender.io (Blender) to the List of Specially Designated Nationals and Blocked Persons (SDN List).

Blender is a digital currency mixer operating on the Bitcoin (BTC) blockchain that facilitates illegal transactions by muddling their origin, destination, and counterparties.

The service receives an assortment of transactions, mixes them up, and then transmits them to their final destinations.

Mixers are mainly used to increase transactional privacy, but platforms like Blender have become favored tools for bad-faith actors to obscure their financial footprints.

Since it was created in 2017, the platform has facilitated the transfer of more than half a billion dollars’ worth of BTC. 

Blender Complicit in Ronin Hack

According to Treasury, Blender.io was used by the Democratic People’s Republic of Korea (DPRK) to support nefarious cyber activities and launder stolen crypto.

The Office of Asset Control (OFAC), which is responsible for the SDN List, stated that an outfit known as the Lazarus Group carried out the largest crypto heist in history when it made off with nearly $620 million from the Ronin network, a blockchain affiliated to the popular play-to-earn (P2E) game Axie Infinity.

The Lazarus Group, identified as a front for the North Korean intelligence agency, had already been sanctioned by OFAC in 2019.

According to the Treasury department, Blender was used by the Lazarus Group to process parts of the funds stolen from Ronin, amounting to nearly $20.5 million.

In the Friday update, OFAC listed 46 BTC addresses and 12 Ether (ETH) addresses that had been sanctioned. The Bitcoin addresses were all associated with Blender.io, while the ETH addresses were linked to the Lazarus Group.

OFAC has also sanctioned several addresses linked to the Ronin hack.

Treasury Hopeful of Nipping Cyber Criminals in the Bud

In addition to its relationship with the Lazarus Group, the Treasury Department has also accused Blender of facilitating the money laundering activities of notorious Russian-linked ransomware groups such as Gandcrab, Conti, Sodinokibi, Ryuk, and Trickbot.

Speaking about the move to ban the virtual currency mixer, Brian E. Nelson, the undersecretary of the Treasury for Terrorism and Financial Intelligence, said:

Today, for the first time ever, Treasury is sanctioning a virtual currency mixer. Virtual currency mixers that assist illicit transactions pose a threat to U.S. national security interests. We are taking action against illicit financial activity by the DPRK and will not allow state-sponsored thievery and its money-laundering enablers to go unanswered.”¬†

OFAC hopes that sanctioning Blender.io will stop the service from tapping into the global financial system and leveraging crypto payments for illicit actors.

The department has also reiterated its commitment to exposing and dismantling components of the crypto ecosystem that play critical roles in hiding the trails of illicit proceeds from hacking and ransomware attacks.