Treasury sanctions cryptocurrency tool used by North Korea

The U.S. Treasury Department announced sanctions Friday on online cryptocurrency tool Blender, which is used by North Korea to steal and launder virtual currencies, the department said.

A North Korea cyber operations unit, known as the Lazarus Group, which had already been sanctioned by the U.S., carried out a $620 million heist in March and used the Blender tool to launder more than $20 million of the stolen funds, Treasury said.

Blender, or Blender.io, is a cryptocurrency tool known as a “mixer,” software designed to anonymize the source of virtual currency by exchanging it for an equal amount of randomized currencies.

“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 E. Nelson. “Virtual currency mixers that assist illicit transactions pose a threat to U.S. 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.”

On its website, Blender says its service “breaks the connection” between transactions and renders regulating authorities “unaware” of who owns what cryptocurrency.

“You send bitcoins from your address to the mixer address. After that the mixer sends you bitcoins from its premixed reserve. Bitcoins in this reserve have no connection to your addersses [sic]. An observer, analyzing the chain of transations [sic] in the blockchain, is unaware of the change in ownership of bitcoins, therefore any following bitcoins passed through the mixer is no longer practical. This way the mixer ensures the anonymity of your transaction in blockchain,” the company’s website says.

Blender did not immediately respond to a request for comment.

“While the purported purpose is to increase privacy, mixers like Blender are commonly used by illicit actors,” Treasury said.

The March heist involved an online game called Axie Infinity, which is based on transactions that use non-fungible tokens (NFTs), digital objects used to store value on the blockchain platforms that support cryptocurrencies. The game has players collect NFTs rendered as digital pets.

Blender was sanctioned by the U.S. Treasury’s Office of Foreign Asset Control (OFAC) for having supported cyber activity that may threaten “the national security, foreign policy, or economic health or financial stability of the United States.”

“OFAC is identifying four additional virtual currency wallet addresses used by the Lazarus Group to launder the remainder of stolen proceeds from the March 2022 Axie Infinity heist,” Treasury said.