June 24, 2022

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US penalizes Blender.io for aiding North Korea launder millions in stolen Axie cryptocurrency

3 min read
US penalizes Blender.io for aiding North Korea launder millions in stolen Axie cryptocurrency

The US Treasury Department announced on Friday that it would be blocking Blender.io which is blocking the Bitcoin mixer from the US financial system (legally in the sense). The department claims that Blender.io, which allows users to obfuscate the records normally maintained by blockchains, was employed in the case of North Korea to “support its malicious cyber activities and money-laundering of stolen virtual currency.”

The release from the Treasury Blender.io was utilized for an organization called the Lazarus hacking organization to transfer $20.5 million of cryptocurrency it claimed to steal from the game based on crypto Axie Infinity. The proceeds of the hack were reported to be Treasury tied with Lazarus as well as North Korea in April the month of April, was estimated to be approximately $625 million at the time of the hack however, a small amount of million dollars were found. The Treasury declares that Lazarus is funded by the North Korean government and that the country utilizes hackers to “generate revenue for its unlawful weapons of mass destruction (WMD) and ballistic missile programs.”

This press release from the Treasury states that it’s the first time the Treasury has sanctioned an online currency mixer. (It has issued other sanctions related to crypto, however particularly, in the year 2000 when it introduced its initial sanctions for the exchange.) Blender.io was not the only tool that hackers utilized, however, for the first time in the process, the money stolen off the Axie Infinity‘s Ronin networks was initially made up of Ethereum and USDC and Blender worked with Bitcoin but at some point, it was necessary to make an exchange. There’s also evidence that hackers have filtered some of the funds using Tornado Cash which is an application designed to make it more difficult to trace transactions.

Blender is accused of US Treasury also alleges that Blender was a conduit for money laundering for ransomware companies such as Conti, Trickbot as well as Sodinokibi (aka REvil). Since it’s been banned, it won’t be in a position to get access to its funds stored in the US as well as perform business with American corporations or American citizens of the United States.

Blender and mixers function by pooling funds and then randomly dispersing the funds. Since transactions are stored on blockchains, it could be difficult to trace stolen funds without these kinds of services. The coins that are stolen go into the blender and hackers can theoretically receive clean coins. (And the person who gets the stolen coins could return at the mixer and say “Well, you can see I didn’t take them out of the wallet myself.”)

Like as was the case in the incident with the Axie attack, government officials can block wallets associated with hacking organizations researchers can trace stolen crypto movements. If thieves want to transform their stolen cryptocurrency into, for instance, Lamborghinis, they need to ensure that they aren’t being tracked.

As the Treasury states that there are legal ways to use this service. People could utilize them to achieve a sense of security when they make transactions with cryptocurrency, for instance. However, since the Treasury Department is conducting such an intense check on the criminals who use crypto the situation is beginning to feel like businesses are required to be aware of the people whose cash they spend and then squander.

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