Treasury Sanctions Crypto Firm After North Korea’s $620m Heist

Cryptocurrency mixing service Blender.io has become the first business of its kind to be hit with US government sanctions after it was allegedly used by North Korean hackers following a major crypto theft.

The US Treasury’s Office of Foreign Assets Control (OFAC) claimed the firm was used by the Democratic People’s Republic of Korea (DPRK) to launder over $20.5m of the $620m estimated to have been stolen from Ronin Network in March.

“Today, for the first time ever, Treasury is sanctioning a virtual currency mixer,” said Under Secretary of the Treasury for terrorism and financial intelligence, Brian Nelson.

“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.”

Crypto mixers take virtual currency from multiple customers and pool it before redistributing it. Although these businesses claim to provide such services to enhance privacy for their customers, there’s an obvious draw for criminal elements keen to launder illicit funds.

The theft from Ethereum sidechain Ronin Network, created by Vietnamese blockchain game developer Sky Mavis, is thought to be the biggest ever recorded.

The US government believes the stolen money is being used to fund North Korea’s nuclear weapons and ballistic missile programs.

Given that the hermit nation is estimated to have stolen $400m during the entirety of 2021, it represents a major haul.

Alongside the sanctions placed on Blender.io, the Treasury has updated its List of Specially Designated Nationals and Blocked Persons (SDN list) to identify four new virtual currency addresses used by North Korea’s Lazarus Group to launder the rest of the funds stolen from Ronin Network/Axie Infinity.

The original incident resulted in the theft of 173,600 Ethereum ($592m) and $25.5m in two transactions. However, given that Blender.io works only in Bitcoin, some of those funds must have been converted first before being fed into the service.