The US imposes sanctions on a crypto mixer” that was used in a North Korea-backed heist

The US has sanctioned a "crypto-mixing" service used in a North Korea-backed raid, in the latest sign of how financial watchdogs are stepping up efforts to stamp out money laundering through digital currencies.

The Treasury Department on Friday unveiled action against Blender.io over its role in helping a North Korean-sponsored hacking group launder $20.5 million in "illicit proceeds" from one of the largest crypto heists ever.

Friday's announcement highlights how U.S. law enforcement agencies are taking a closer look at the flow of money through digital assets for signs of illegal activity. Mixers are a concern because they obscure the trail of transfers that would normally be publicly available on the digital ledgers underlying cryptocurrencies.

“Virtual currency mixers that facilitate illegal transactions pose a threat to U.S. national security interests,” said Brian Nelson, Treasury Under Secretary for Terrorism and Financial Intelligence.

US sanctions are a particularly powerful tool because of America's central position in the global financial system. The measures implemented on Friday are intended to curb the movement of money to and from Blender.io.

According to Treasury, Blender.io has facilitated the transfer of over $500 million worth of Bitcoin since its founding five years ago. The group “operates on the Bitcoin blockchain and indiscriminately facilitates illegal transactions by obscuring their origin, destination, and counterparties.”

An email requesting comment from Blender.io was returned as undeliverable.

The mixer supported North Korea-backed Lazarus Group's efforts to launder the proceeds from a recent hack against a crypto network used by Axie Infinity, a popular play-and-earn crypto game, Treasury said. The hacking group is accused by the US of stealing nearly $620 million in crypto assets.

Beyond North Korea, the Treasury Department said Blender.io facilitated money laundering activities for the Russia-linked ransomware group Conti, among other things. This follows widespread concerns about the crypto industry's role in evading Russian sanctions.

The sanctions against Blender.io are also indicative of the US government's broader ambitions to crack down on illegal crypto activity.

“While [Treasury] has been targeting laundering services used by hackers, ransomware operators and other illicit actors in recent months, this is the first designation of a mixer, indicating progress in their strategy to dismantle crypto money laundering infrastructure,” Andrew Fierman, head of sanctions strategy at ChainAnalysis, said.