Cryptocurrency “Mixers” See Record transactions from sanctioned players

Written by Tonya Riley

The use of so-called cryptocurrency “mixers”, which combine different types of assets to hide their origins, peaked with a 30-day average of almost $ 52 million in digital currency in April, representing an unprecedented amount of funds flowing through these services, researchers at cryptocurrency analysis firm Chainalysis have found.

An almost doubling of funds sent from illegal addresses accelerated the increase, indicating that technology that can obscure currency remains extremely attractive to cybercriminals.

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Cryptocurrency mixers work by taking a person’s cryptocurrency and combining it with a larger pool before returning units equal to the original amount minus a service charge to the original account. As a result, it is more difficult for law enforcement and cryptocurrency analysts to track the currency.

Blenders are not only used by criminals, but are extremely popular with them. Chainalysis found that 10% of all funds from illegal wallets are sent to mixers, while mixers received less than 0.5% from other sources of funds that the company tracked, including mining projects, decentralized funding.

Most of the illegal funds transferred to the mixers came from sanctioned players, primarily the Russian dark market Hydra and recently the Lazarus Group, a group of North Korean state-sponsored hackers. International law enforcement removed Hydra, which was responsible for 80% of dark web transactions involving cryptocurrency, in May. The U.S. Treasury Department’s Office of Foreign Assets Control followed suit with sanctions on more than 100 of its cryptocurrency addresses.

The use of mixers by North Korean state-sponsored hackers and a popular mixer they used to launder money accounted for the rest of the transfers.

North Korean hackers have consistently used financial hacking to circumvent US sanctions, and this year they have been particularly busy targeting cryptocurrency companies. The Treasury Department updated its sanctions against the Lazarus Group in April to tie the group to a $ 620 million hack in assets in March from a bridge linking the Axie Infinity video game to the Ethereum blockchain.

Recently, researchers linked funds stolen by the Lazarus Group from a Harmony blockchain project to the Tornado Cash mixer.

“It shows that the type and type of blender user profile has really evolved from being a petty criminal type, dark network market provider to Russia or nation state actor,” said Kim Grauer, head of research. at Chainalysis.

Financial regulators have taken notice. In May, the Treasury Department sanctioned the popular blender Blender.io for processing $ 20.5 million of the $ 620 million that Lazarus Group stole from the Axie Infinity project.

The move is something that “would have been unheard of a few years ago,” Grauer said.

An increase in transfers from decentralized financing projects (DeFi) has also contributed to increased use of mixers, notes Chainalysis. State-sponsored actors have also been known to use DeFi projects as a money laundering tool.

Chain lighting researchers and the Treasury Department are careful to note that there are legitimate uses for mixers, such as the anonymity of an oppressive government. However, since most do not comply with U.S. rules that require stock exchanges to know who their customers are, it is easier for criminals to exploit them.

Mixers, however, have a serious weakness. The more money criminals inject, the easier it is to track their aperture usage. This means that hackers are limited in what they can launder before they arouse suspicion.

“I think in the long to medium term it will definitely fall just because it is not sustainable,” Grauer said.

-In this story-

Chain analysis, cryptocurrency, cybercrime, Ministry of Finance, Hydra, Lazarus Group, mixers, North Korea, privacy, Russia, sanctions, Ministry of Finance

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