Blender.io, a popular cryptocurrency mixing service, has recently made headlines as the first of its kind to be targeted by US government sanctions. The reason behind this move is the alleged involvement of the service in a major crypto theft orchestrated by North Korean hackers.
According to the US Treasury’s Office of Foreign Assets Control (OFAC), Blender.io was utilized by the Democratic People’s Republic of Korea (DPRK) to launder a staggering $20.5 million out of the estimated $620 million stolen from the Ronin Network back in March.
The significance of this action was highlighted by Under Secretary of the Treasury for terrorism and financial intelligence, Brian Nelson, who stated, “Virtual currency mixers that assist illicit transactions pose a threat to US 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.”
Cryptocurrency mixers like Blender.io are known for pooling virtual currency from multiple customers before redistributing it, claiming to enhance privacy for their users. However, this anonymity also attracts criminal elements seeking to launder their ill-gotten gains.
The theft from the Ethereum sidechain Ronin Network, developed by Sky Mavis, is considered one of the largest in history. The US government suspects that the stolen funds are being used to finance North Korea’s nuclear weapons and ballistic missile programs, adding to the country’s estimated $400 million in illicit gains for 2021.
In addition to sanctioning Blender.io, the Treasury has updated its List of Specially Designated Nationals and Blocked Persons (SDN list) to include four new virtual currency addresses linked to North Korea’s Lazarus Group, which was responsible for laundering the remaining stolen funds from the Ronin Network/Axie Infinity incident.
The initial theft involved the disappearance of 173,600 Ethereum ($592 million) and $25.5 million in two transactions. Since Blender.io exclusively deals in Bitcoin, it is presumed that some of the stolen funds had to be converted before being processed through the service.
This development underscores the ongoing challenges posed by illicit financial activities in the cryptocurrency space and the need for regulatory measures to curb money laundering and terrorist financing.