.svg)
A virtual currency mixer has been sanctioned by the US Treasury’s Office of Foreign Assets Control (OFAC) for its role in aiding North Korea.
Blender.io, a virtual currency platform, has found itself blocked from providing services to the United States following a ruling from OFAC, with all property and interests of the group needing to be reported to the regulator.
Virtual currency mixers, such as Blender.io, are digital asset service providers that allow users to obscure the tracking of crypto payments.
The decision was taken following a cyber-attack in March this year.
This was undertaken by Lazarus Group, a Democratic People’s Republic of Korea (DPRK) state-sponsored cyber hacking group, which carried out the largest virtual currency heist to date, worth almost $620m, from a blockchain project linked to online game Axie Infinity.
As well as action against the virtual currency mixer, the Treasury has said that OFAC is identifying four additional virtual currency wallet addresses used by the Lazarus Group to launder the remainder of stolen proceeds from the March 2022 Axie Infinity heist.
Blender was used in the processing of more than $20.5m of the illicit proceeds.
“Virtual currency mixers that assist illicit transactions pose a threat to US national security interests,” said Brian E. Nelson, under-secretary of the Treasury for Terrorism and Financial Intelligence. “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.”
The Treasury has also confirmed that it is updating the List of Specially Designated Nationals and Blocked Persons (SDN List) to identify additional virtual currency addresses used by the Lazarus Group to launder illicit proceeds.
According to the regulator, Blender has helped transfer more than $500m worth of bitcoin since its creation in 2017.
Meanwhile, the investigation uncovered Blender’s facilitation of money laundering for, among others, Russian-linked malign ransomware groups including Trickbot, Conti, Ryuk, Sodinokibi and Gandcrab.
This may be the first sanction for a virtual currency mixer, but it is not the first penalty. In 2020, the Treasury’s Financial Crime Enforcement Network (FinCEN) assessed a $60m civil money penalty against the owner and operator of a virtual currency mixer for violations of the Bank Secrecy Act (BSA) and its implementing regulations.
The Treasury is also not the only department keen to take a tough approach to bad actors in the crypto space.
At the same time as Blender.io was sanctioned, the Department of Justice (DOJ) announced that it has indicted the chief executive of Mining Capital Coin (MCC), a purported crypto mining and investment platform for allegedly orchestrating a $62m global investment fraud scheme.
According to the DOJ’s indictment, Luiz Capuci Jr. had misled investors about MCC’s crypto-asset mining and investment programme, which encouraged victims to invest in MCC by purchasing so-called Mining Packages.
Under this programme, Capuci and his co-conspirators touted MCC’s purported international network of cryptocurrency mining machines as being able to generate substantial profits and guaranteed returns by using investors’ money to mine new crypto-assets.
Capuci additionally touted MCC’s own crypto-asset, the Capital Coin, as being “stabilised by revenue from the biggest crypto-asset mining operation in the world”.
As alleged in the indictment, however, Capuci operated a fraudulent investment scheme and did not use investors’ funds to mine new crypto-asset, as promised, but instead diverted the funds to crypto-asset wallets that were under his control.
