Cryptocurrency mixers are sometimes used to help online criminals launder their stolen money by hiding its true origins, and the US Treasury is now ready to clamp down on them when hostile governments are involved. The department has issued its first sanctions against a Bitcoin mixer, Blender.io, for allegedly and “indiscriminately” helping North Korea launder over $20.5 million in crypto from the $620 million Axie Infinity heist and other crimes.
The measures block all Blender property in the US (or controlled by US residents), as well as US-linked transactions and any entities where blocked people have majority control. On a basic level, blocks create an audit trail and prevent sanctioned entities’ funds from changing hands.
The sanctions come after officials pinned the Axie Infinity theft on Lazarus Group, an outfit frequently linked to the North Korean government’s cybercrime and cyberwarfare efforts. North Korea has been repeatedly accused of hacking banks and cryptocurrency holders to evade international sanctions and finance its weapons programs.
The Treasury’s Office of Foreign Assets Control also used the opportunity to identify four digital wallets Lazarus reportedly used to launder the rest of the Axie Infinity crypto. The perpetrators relied on one “getaway” wallet for the crime itself.
The agency stressed that most cryptocurrency activity was legal, and that it was only targeting mixers that aid criminals. However, there’s a not-so-subtle warning here: the US is willing to sanction crypto service providers if they tolerate state-backed hackers, not just the nations directing those hacks.