The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury has placed sanctions on cryptocurrency mixing service Sinbad, alleging that the mixer served as a money laundering channel for the notorious North Korean hackers Lazarus Group.
According to the enforcement agency, Sinbad has been used to launder millions of dollars worth of stolen crypto assets from high-profile hacks.
Lazarus Group Preferred Sinbad to Launder Stolen Crypto Funds
In a press release on Nov. 29, 2023, OFAC claimed that Sinbad was a “preferred” mixer for North Korea’s Lazarus Group, sanctioned in September 2019, alleging that the crypto mixing service helped process the hacking group’s illicit proceeds from various cryptocurrency heists.
According to the government agency, Sinbad laundered significant portions of stolen crypto assets from Atomic Wallet, Axie Infinity, and Harmony’s Horizon Bridge hacks.7
With Sinbad included in OFAC’s updated specially designated nationals (SDN) list, authorities have also seized the mixer’s website. A visit to the site has the following notice:
“This website has been seized as part of a coordinated law-enforcement action between the Federal Bureau of Investigation, the Financial Intelligence and Investigation Service (FIOD), and the National Bureau of Investigation taken against the Sinbad.io cryptocurrency mixing service.”
Also, the report claimed that cyber criminals utilized the mixer to obfuscate transactions connected to drug trafficking, child sexual abuse materials, and sanctions evasions.
3 Crypto Mixers Now Sanctioned in the U.S.
The latest development, meanwhile, marks the third crypto mixer sanctioned by OFAC. The agency previously took action against Blender and Tornado Cash, with one of the latter’s co-founders, Roman Semenov, added to the SDN list.
While Semenov is said to be at large, another Tornado Cash co-founder, Roman Storm, in September pleaded not guilty to charges ranging from money laundering to violation of sanctions, following his arrest and subsequent release on bail.
Tornado Cash’s sanction by OFAC received backlash from the crypto community, who believed the government acted beyond its powers. However, the Ethereum-based cryptocurrency mixer lost its case against the agency, seeking to dismiss the allegations.
Blender, on the other hand, allegedly rebranded as Sinbad. Speaking on the latest sanction, Wally Adeyemo, Deputy Secretary of the Treasury, said:
“Mixing services that enable criminal actors, such as the Lazarus Group, to launder stolen assets will face serious consequences. The Treasury Department and its U.S. government partner stand ready to deploy all tools at their disposal to prevent virtual currency mixers, like Sinbad, from facilitating illicit activities. While we encourage responsible innovation in the digital asset ecosystem, we will not hesitate to take action against illicit actors.”
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