US Takes Aim at North Korean Crypto Laundering

The U.S. sanctioned a cryptocurrency swap service on Friday, part of a larger effort to crack down on North Korea's practice of using hackers to steal money for the state. From a report: The sanctions, leveled against the company Blender.io, mark the first time that the U.S. Treasury Department has taken action against what is known in the cryptocurrency industry as a mixer, a for-profit service that allows users to move crypto between accounts without leaving a clear transaction record. Treasury said in a news release that North Korea has used Blender.io to launder more than $20.5 million of cryptocurrency that it allegedly stole from the online game Axie Infinity in March. Hackers stole more than $600 million worth of cryptocurrency from the game's owner. Blender.io did not immediately respond to an emailed request for comment. Its site was inaccessible Friday.

Re:Cyber! Hackers! Crypto!

[GameboyRMH]

It is actually big news that the US government is taking action against a mixer service due to money laundering activity, it's the first I'm aware of. Arguably the first major enforcement action against a cryptocurrency company, marking a change from the Trump administration's derpy hands-off approach that gave us the age of ransomware and tulipmania 2.0.

Re:

[bill_mcgonigle]

> it's the first

Overtly.

Several years ago, a US state actor took over the Helix mixer and stole funds, funneling them into their black-ops budget before being discovered and quietly wound down.

("At least that's what I've heard.")

But, hey, many protocols have built-in anonymity sets, so mixers are becoming a thing of the past. People leveraging BTC with Tether don't actually care about cryptanalysis. Surprising that the north Koreans are using mixers. Probably it's their decoy transactions.

Re:

[ISayWeOnlyToBePolite]

https://www.justice.gov/opa/pr... [justice.gov]

Know Your Customer

[ranton]

The article says what blender.io is doing isn't illegal, so does that mean they aren't subject to Know Your Customer (KYC) regulations and US Code 1956/1957, meant to combat money laundering? Otherwise it would appear they are doing something illegal, as long as the allegations prove correct.

They're probably not yet classified as a bank

[rsilvergun]

or financial institution. Or at least that's what they'd probably argue in court. Eventually the gov't will issue some sort of proclamation saying they are and give 'em a few weeks/months to shut down or clean up their act. And since they're really only useful for money laundering they'll shut down.

Basically the gov't doesn't have to try to regulate crypto out of existence, just enforcing basic laws needed for a functioning economy will do that. We learned in the 1930s that you can't just "Let'er roll".

Just go after the exchanges

[rsilvergun]

and have them track laundered crypto and seize it. They've already shown they're capable of identifying stolen cryptocurrency and seizing it, adding money laundering shouldn't be much of a stretch.

Of course this does mean that every time you trade with an exchange you run the risk of finding out your currency has been flagged as illegal. It's a bit like having a dollar bill with it's entire sorted history written on it instead of just trace elements of cocaine.

Re: Just go after the exchanges

[dada21]

You really need to understand Greshamâ(TM)s Law better.

You look incredibly foolish.