Russian Cryptomixers Charged with Money Laundering
U.S. federal officials have targeted cryptocurrency mixing services Sinbad.io and Blender.io for prosecution, charging three Russians involved in the companies with money laundering.
What is Cryptomixing?
A cryptocurrency mixing service is a service that allows people to send cryptocurrency to someone else while concealing its origins, according to the indictment.
From October 2018 to April 2020, users could use Blender.io to mix their Bitcoins with other users to conceal who controlled the Bitcoin, according to the indictment. For a fee, Blender.io helped disguise the connection between the sender and receiver of the Bitcoin.
No Logs Policy
On Oct. 18, 2018, Blender.io was allegedly advertised on Bitcointalk.org as having a “No Logs Policy,” telling potential users that the traces of their transactions were deleted as soon as the transaction was completed, according to the indictment. This allowed criminals to conduct unlawful activity through the platform.
One instance occurred on Nov. 2, 2021, when Blender.io was used to transfer $24,000 worth of Bitcoin to a concealed location, according to the indictment. Prosecutors say that money was the proceeds of a ransomware hack.
Blender.io was sanctioned on May 6, 2022, by the Department of Treasury’s Office of Foreign Assets Control for allegedly helping the Democratic People’s Republic of Korea launder cryptocurrency, according to the indictment.
On Oct. 13, 2022, Sinbad.io reportedly picked up when Blender.io left off, assisting users who wanted to conceal their transactions, according to the indictment. This is how they explained it in their website’s Frequently Asked Questions section:
On June 5, 2023, Sinbad.io was reportedly used to commit wire fraud in the transfer of $147,136 worth of Bitcoin, according to the indictment.
Promoting Unlawful Activity and Other Charges
Ostapenko, Tarasov and Oleynik are accused of using Blender.io to promote unlawful activity, transmitting millions of dollars without registering Blender.io as a money-transmitting business, according to the indictment.
Ostapenko has been charged with conspiracy to commit money laundering and two counts of running a money-transmitting business without a license, according to the DOJ press release. Tarasov and Oleynik were also charged with conspiracy to commit money laundering, but only one count was for operating a money-transmitting business without a license.
They each face 25 years in prison if convicted.
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