The Treasury Department of the United States has begun to crack down on cryptocurrency mixers.
The government’s economic and financial agency added the virtual currency mixer Blender to its list of sanctioned entities on Friday, citing its use in North Korea state-sponsored cyber attacks. Blender’s many website domains, plus a bunch of digital currency addresses, have been added to the Office of Foreign Assets Control’s “Specially Designated Nationals” List.
Blender, a virtual currency mixer, enables consumers to protect their privacy while transferring digital assets by concealing their transaction history. They generally operate by pooling transactions and transmitting them to new addresses, allowing a sender to deposit coins and withdraw them from a new, “clean” address. This makes tracking their activities on a public blockchain ledger much more difficult. Criminals often utilise mixers because they enable users to remain anonymous while utilising cryptocurrency. The majority of DeFi hacks on Ethereum, for example, lead to Tornado Cash, a popular mixer that uses zero-knowledge proofs to help users hide their traces on the blockchain.
The recent OFAC update creates a precedent since it is the first time the United States has sanctioned a cryptocurrency mixer. The US has been investigating North Korean-linked cyber attackers in recent months, and last month declared that the Ronin Network heist was carried out by the Lazarus Group. In January, cybersecurity company Kaspersky reported that BlueNoroff, one of Lazarus Organization’s primary companies, had employed phishing attacks against crypto startups, while Arthur Cheong of DeFiance Capital claimed to have proof that the group was responsible for the $1.7 million NFT loss he experienced in March.
Despite the fact that this is the first time a mixer has been included on the US sanctions list, mixers have been a popular topic of discussion in the cryptosphere in recent months. Tornado Cash generated controversy last month when it revealed that it had begun using a Chainalysis oracle to restrict sanctioned users from its frontend, raising concerns about its censorship resistance and decentralisation. Because mixers are often the first port of call for cryptocurrency criminals after an attack, Blender may not be the last to be added to OFAC’s list.
