Treasury Sanctions Crypto Mixer Over North Korean Attacks

The Office of Foreign Assets Control said that North Korean hackers had recently used Blender to launder digital assets. 

U.S. Treasury Sanctions Blender 

The U.S. Treasury Department has begun clamping down on cryptocurrency mixers. 

The government’s economic and finance office added the virtual currency mixer Blender to its list of sanctioned entities Friday, citing its usage among North Korean state-sponsored cyber attacks. The Office of Foreign Assets Control updated its “Specially Designated Nationals” List to include Blender’s various website domains alongside a host of digital currency addresses. The Treasury said that Blender had helped North Korea-backed hackers launder $550 million stolen from Axie Infinity’s Ronin Network in March. 

Virtual currency mixers like Blender help users preserve their privacy when moving digital assets by obfuscating their transaction history. They typically work by pooling transactions together and sending them out to new addresses, meaning a sender can deposit coins and withdraw them from a new, “clean” address. This makes their trail of activity much harder to trace on a public blockchain ledger. As mixers help users stay private when using crypto, they’re popularly used by criminals. Most DeFi hacks on Ethereum, for example, tend to lead to Tornado Cash, a popular mixer that leverages zero-knowledge proofs to help users cover their tracks on the blockchain. 

The latest update from the Treasury’s OFAC sets a precedent because it’s the first time the U.S. has sanctioned a cryptocurrency mixer. In recent months, the United States has been tracking North Korea-linked cyber attackers and last month declared that Lazarus Group was behind the Ronin Network heist. In January, the cybersecurity firm Kaspersky warned that BlueNoroff, one of Lazarus Group’s core units, had used phishing attacks on crypto startups, while DeFiance Capital’s Arthur Cheong claimed to have evidence that the group was responsible for the $1.7 million NFT theft he suffered in March. 

Though this is the first time a mixer has been added to the U.S. sanctions list, mixers have become a hot topic of discussion in the crypto sphere in recent months. Tornado Cash sparked controversy last month when it announced that it had started using a Chainalysis oracle to block sanctioned users from its frontend, raising questions about its degree of censorship resistance and decentralization. As mixers are often the first port of call for cryptocurrency criminals following an attack, Blender may not be the last one that ends up on OFAC’s ban list. 

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.