The U.S. Treasury Department has sanctioned cryptocurrency mixing service Sinbad.io (Sinbad) for its role in enabling money laundering by North Korean state-sponsored hacking groups, according to a Nov. 29 press release.
Sinbad reportedly processed millions of dollars in cryptocurrency stolen in high-profile cyberattacks attributed to North Korea-linked hacking group Lazarus Group, according to the Treasury Department. The Lazarus Group was already sanctioned in 2019 for its cyber attacks, which reportedly netted more than $2 billion in stolen digital assets over the past decade.
Sinbad has been specifically linked to money laundering from the recent $100 million hack of cryptocurrency wallet provider Atomic Wallet, and last year’s $620 million Axie Infinity hack and Horizon Bridge exploit $100 million.
“Combining services that enable criminal actors, such as the Lazarus Group, to launder stolen assets will have serious consequences,” said Deputy Treasury Secretary Wally Adeyemo, adding that “The Treasury Department and its U.S. government partners are ready to deploy all instruments on their territory.” to prevent virtual currency mixers, such as Sinbad, from facilitating illegal activities.”
The Treasury Department’s sanctions against Sinbad come after previous actions taken this year against cryptocurrency mixers Blender.io and Tornado Cash for facilitating money laundering by the Lazarus Group. Some industry experts believe that Sinbad is a successor to Blender.io, but this has not been proven.
Continued crackdown
The Treasury Department has intensified its crackdown on cryptocurrency mixers since its first major action sanctioning Tornado Cash in August 2022 over money laundering concerns linked to North Korea. Tornado Cash, which had laundered more than $7 billion since 2019, was sanctioned for handling funds stolen by North Korean hacking group Lazarus Group.
The developers of Tornado Cash have also faced legal ramifications. Co-founders Roman Storm and Roman Semenov were charged in August 2023 with conspiracy to commit money laundering, sanctions violations and operating an unlicensed money transmitter. Storm was arrested, while Semenov remains at large.
Crypto advocacy group Coin Center filed a lawsuit against the Treasury Department, claiming the Tornado Cash sanctions violated privacy rights and represented government overreach. However, a federal judge dismissed the case in November, ruling that there is no constitutionally protected right to use a particular financial instrument for donations under the First Amendment.
Moreover, Deputy Treasury Secretary Wally Adeyemo gave an ominous speech in October warning digital asset companies that “if they do not act to prevent illicit financial flows, the United States and our partners will.” This indicates that the Ministry of Finance intends to continue to focus on services that enable sanctions evasion and money laundering. The Ministry of Finance recently labeled crypto-mix transactions as a new category of ‘primary money laundering’.
