Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
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US Treasury of Foreign Assets Control Sanctions Virtual Currency Mixer (First Time Ever)
Mayer Brown | May 13, 2022
On May 6, 2022, the US Department of the Treasury's Office of Foreign Assets Control ("OFAC") designated crypto mixer Blender.io as a Specially Designated National ("SDN"), marking the first time a virtual currency mixer has been sanctioned. The move is the latest in a series of sanctions designations and enforcement actions in the virtual currency industry based on a determination of involvement in malicious cyber attacks and laundering the stolen virtual currency proceeds of illicit ransomware attacks.
See: NASAA: Crypto scams are the leading threat to investors in 2022
The May 6 designation follows several sanctions actions in the past few weeks alone in the virtual currency sector, including:
- The April 20, 2022, designation of Russian crypto mining firm BitRiver and 10 of its subsidiaries for facilitating sanctions evasion by Russia and Russian entities
- The April 14 and April 22, 2022, designations of several Ethereum addresses as being affiliated with North Korea's Lazarus Group and involved in the $625 million Ronin bridge hack
- The April 5, 2022, designations of the world's largest darknet market, Hydra Market; virtual currency exchange Garantex; and over 100 virtual currency addresses based on their roles in enabling the transfers of ransomware proceeds and other actions deemed a threat to US national security and foreign policy interests
Virtual currency mixers such as Blender.io receive a variety of transactions and mix them together before transmitting them to their ultimate destinations. Although proponents of mixers tout their utility in increasing privacy in virtual currency transactions, enforcement officials have highlighted concerns about the exploitation of mixers to assist in sanctions evasion and laundering the proceeds of malicious cyber attacks and other criminal activity by obfuscating the original source of the virtual currency.
See: Hacker steals $625 million from Ronin blockchain NFT game Axie Infinity
In taking the actions described above, OFAC officials have acknowledged that the majority of virtual currency transactions are legitimate, while signaling the increased use of sanctions against platforms and tools that engage in facilitation of sanctions evasion or transactions involving the proceeds of malicious cyber attacks and other criminal conduct.
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