US sanctions crypto mixer used by North Korea to launder funds

WASHINGTON (AFP): The United States on Wednesday sanctioned a crypto mixer that it said was serving as a money laundering tool used by hackers affiliated with the North Korean government.

Crypto mixers are software allowing users to obfuscate transactions, and have been used by hackers in attempts to exchange crypto into fiat currency.

The US Treasury Department said in a statement that its action against Sinbad.io comes as the mixer “has processed millions of dollars’ worth of virtual currency” from heists conducted by a sanctioned hacking group.

“Mixing services that enable criminal actors, such as the Lazarus Group, to launder stolen assets will face serious consequences,” said Deputy Treasury Secretary Wally Adeyemo in a statement, referring to the hacking organization.

“While we encourage responsible innovation in the digital asset ecosystem, we will not hesitate to take action against illicit actors,” Adeyemo added.

Last year, US officials sanctioned another virtual currency mixer called Blender.io, which was also charged with providing services to the Lazarus Group.

The Treasury Department said Wednesday that Sinbad is believed by some industry experts to be a successor to Blender.io.

Sinbad was used to launder a “significant portion” of $100 million worth of virtual currency stolen in June from customers of Atomic Wallet, said the Treasury.

It added that the tool was also tapped to launder a portion of virtual currency from another heist of approximately $620 million in March last year.

In separate remarks released on Wednesday, Adeyemo is expected to tell a summit in Washington that the lack of action by too many crypto firms in preventing abuse of digital assets “represents a clear and present risk to our national security.”

He warned, in prepared remarks to the Blockchain Association’s policy summit, that authorities will hold illicit actors accountable.

Last week, US officials announced a deal that would see cryptocurrency exchange Binance pay over $4 billion in penalties, while its chief executive Changpeng Zhao stepped down and pleaded guilty to money laundering violations.

Adeyemo noted that Binance had “allowed itself to be used by the perpetrators of child sexual abuse, illegal narcotics trafficking, and terrorism.”

He added that the government’s challenge goes beyond cryptocurrency exchanges to other parts of the digital asset ecosystem, such as Sinbad.