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Blender.io has been sanctioned by the US for assisting North Korea in laundering millions of dollars in stolen Axie cryptocurrency

Blender.io is effectively cut off from the financial system in the United States, following the announcement on Friday by the US Treasury Department that it is sanctioning the Bitcoin mixer (legally speaking, anyway). Department of Justice claims that North Korea used the service, which obscures the record normally maintained by the blockchain, to "support its malicious cyber activities and money laundering of stolen virtual currency," according to the department.

Axie Infinity, a cryptocurrency-based game, was allegedly hacked by the Lazarus hacking group, which used Blender.io to launder $20.5 million in cryptocurrency that it allegedly stole from the game, according to reports. The total value of the hack's proceeds, which the Treasury Department linked to Lazarus and North Korea in April, was estimated to be approximately $625 million at the time; however, only a few million dollars have been recovered so far. Lazarus and North Korea have denied any involvement in the hack. Lazarus is said to be backed by the North Korean government, which employs hackers to "generate revenue for its illegal weapons of mass destruction (WMD) and ballistic missile programs," according to the Treasury Department.

As stated in a press release issued by the Treasury Department, this is the first time sanctions have been levied against a virtual currency mixer. There have been other cryptocurrency-related sanctions issued by the agency; for example, it issued its first exchange-related sanction just this past January. When Axie Infinity's Ronin network was compromised, the funds were initially stolen in Ethereum and USDC; however, Blender only works with Bitcoin, so there had to be a conversion at some point. According to reports, some of the funds were filtered through Tornado Cash, a service designed to make it more difficult to track down the origins of transactions.

Blender is also accused of laundering funds for ransomware organizations such as Conti, Trickbot, and Sodinokibi, according to the United States Treasury Department. Any funds held in the United States will no longer be accessible, and it will no longer be able to conduct business with American businesses or individuals.

Blender and other mixers operate by pooling and then randomly distributing funds that have been deposited. Given the fact that transactions are recorded on the blockchain, it can be extremely difficult to use stolen funds if you do not have access to financial services such as these. Coins that have been stolen are placed in a blender, and in theory, the hackers will receive coins that are free of contamination. "It's clear I didn't remove them from my wallet myself," whoever ends up with the stolen coins can say, pointing to the mixer.

Governments can impose sanctions on wallets associated with hacking groups, as was the case with the Axie hack, and researchers can track the movement of stolen cryptocurrencies. To purchase a Lamborghini with illegally obtained cryptocurrency, criminals must take steps to ensure that the transaction cannot be traced back to their location.

As the Treasury Department points out, there are perfectly legal applications for this type of service; for example, individuals could use them to purchase cryptocurrencies in relative anonymity, as the Treasury Department points out. However, with the Department of Justice keeping such a close eye on cryptocurrency crimes, it is becoming increasingly clear that businesses will need to be extremely cautious about whose funds they accept.

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