FIOD takes large crypto currency mixer off the air
On the 27th of November the FIOD and the Public Prosecutor's Office have disrupted one of the largest mixing services for cryptocurrencies. The servers of Sinbad.io were seized in the Netherlands and Finland. This action deals a major blow to the possibilities of concealing criminal money flows by mixing cryptocurrencies such as Bitcoin.
The cryptocurrency mixing service, Sinbad.io is suspected of facilitating on a large scale the concealment of the origin and destination of cryptocurrencies derived from crime. It is estimated that the mixer laundered at least 178 million worth of cryptocurrency in one year. This money originated from crimes, such as crypto currency thefts (so-called "hacks") committed by the North Korean hacker group Lazarus.
A cryptocurrency mixing service is not necessarily illegal. It is an online service that allows users to disguise the origin and destination of cryptocurrencies. With this service, cryptocurrencies are mixed with other users' cryptocurrencies for a fee. Because these transactions are kept in a public record (known as a blockchain), without using a mixer, the origin of the cryptocurrency can be traced using blockchain analytics. For this reason, some users, including criminals, choose to employ a mixer to disguise the origin of their cryptocurrency. Mixing criminal assets and concealing the origin of criminal funds is a criminal offense. In the case of Sinbad.io, more than 50 percent of all mixed cryptocurrencies were found to have a criminal origin. In the case of Sinbad. io, there are no measures in place to implement and enforce a Know Your Customer (KYC) or Know Your Transaction (KYT) policy.
Cryptocurrency mixing services and hosters that facilitate this are of great value to criminals, and organized crime in particular. Increasingly, similar services are being hosted on servers in the Netherlands. Dutch investigative agencies such as the FIOD will continue to crack down on this. This action aimed at Sinbad.io is a heavy blow to organized crime and also serves as an example and warning to founders and users of similar services.
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