US Cracks Down On Crypto Mixers Following Axie Infinity Attack
On May 5, the Office of Foreign Assets Control updated its 'Specially Designated Nationals' list to include Blender's various website domains as well as a slew of digital currency addresses. Blender is known for being a tool that hackers use to launder money, and it has been linked to several cyber assaults sponsored by the North Korean government.
While this may not be the end of crypto mixers, it is certainly a step in the right direction for deterring future cybercrime. It remains to be seen what effect, if any, the U.S. sanctions will have on Blender and other crypto mixing platforms.
Blender, for example, is a platform that allows users to mix and match virtual currencies without revealing their transaction history. A crypto mixer usually combines transactions together and sends them out to new addresses, thus allowing someone to deposit coins and withdraw them from a "clean" address, which makes it significantly more difficult to trace their financial transactions on a public blockchain ledger.
More crypto mixer crackdown to follow?
Mixers are popular among cryptocurrency scammers because they allow users to keep their identities private when using cryptocurrencies. For example, the most frequent Ethereum DeFi hacks result in Tornado Cash, a prominent mixer that employs zero-knowledge proofs to conceal transactions on-chain.
Following the Treasury's OFAC's latest update, which sanctions a cryptocurrency mixer for the first time, this establishes a precedent. Last month, the United States identified Lazarus Group as the mastermind of the Ronin Network theft, and in recent months it has been monitoring North Korea-related cyber attackers. In January, Kaspersky Lab revealed that one of the Lazarus Group's primary branches, BlueNoroff, had utilized phishing attacks on cryptocurrency firms.
The controversy around Tornado Cash just last month was sparked when the platform announced that it had started utilizing a Chainalysis oracle to prevent banned users from its frontend, raising concerns about its degree of censorship resistance and decentralization. Mixers are frequently the first stop for cryptocurrency robbers following an assault, and Blender may not be the final one to get placed on OFAC's blacklist.