The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has taken decisive action against Sinbad.io, a virtual currency mixer, for its role in laundering millions of dollars from cyber heists conducted by the notorious Lazarus Group, a cyber hacking group backed by the Democratic People’s Republic of Korea (DPRK). Sinbad has been a crucial tool for laundering proceeds from high-profile heists such as those on Horizon Bridge and Axie Infinity.
This move against Sinbad is part of a broader strategy to clamp down on the elements of the virtual currency ecosystem exploited by malicious cyber actors, particularly the Lazarus Group. Previous actions by OFAC include sanctions against Blender, another virtual currency mixer used by the Lazarus Group, and a redesignation of Tornado Cash. Additionally, OFAC sanctioned two over-the-counter virtual currency traders for aiding DPRK actors in converting stolen virtual currency to fiat currency.
Sinbad, believed by some to be a successor to Blender.io, operates on the Bitcoin blockchain, effectively obscuring the origins, destinations, and counterparties of illicit transactions. The mixer was instrumental in laundering significant portions of stolen virtual currency from various heists, including the massive $620 million Axie Infinity heist in March 2022 and the Horizon Bridge heist of approximately $100 million in June 2022.
The Lazarus Group, sanctioned by OFAC since September 13, 2019, under Executive Order 13722, is identified as an entity controlled by the DPRK government. With a history of over ten years, the group is responsible for stealing over $2 billion in digital assets to fund the DPRK’s unlawful weapons programs, exacerbated by stringent U.S. and United Nations sanctions. Sinbad‘s designation follows its substantial role in supporting cyber-enabled activities posing a significant threat to U.S. national security, foreign policy, and economic health.
As a consequence of this action, all property and interests in property of Sinbad within U.S. jurisdiction or under the control of U.S. persons are now blocked and must be reported to OFAC. U.S. persons are generally prohibited from all dealings involving the property or interests in property of a blocked or designated entity. Furthermore, individuals engaging in certain transactions with Sinbad may also face sanctions exposure.
This sanction highlights OFAC’s commitment not just to imposing sanctions but also to lifting them in compliance with the law, aiming to promote positive behavioral change rather than mere punishment.
