Three Russian Founders Charged for Operating Crypto Mixers

A federal grand jury has indicted three Russian individuals for running Blender.io and Sinbad.io, two crypto-mixing services reportedly used for money laundering. 

The DOJ’s investigation found that these two mixers were users to launder proceeds from several ransomware attacks, crypto scams, and other crimes.

DOJ’s Crackdown Against Crypto Money Laundering

Crypto mixers allow users to obscure the origin of their cryptocurrency transactions. According to the indictment, the accused operated platforms that helped criminals disguise illicitly obtained funds, including ransomware payments and wire fraud proceeds.

The three individuals indicted are Roman Vitalyevich Ostapenko, Alexander Evgenievich Oleynik, and Anton Vyachlavovich. They are all charged with multiple counts of conspiracy to commit money laundering and unlicensed money transmitting business.

“By allegedly operating these mixers, the defendants made it easier for state-sponsored hacking groups and other cybercriminals to profit from offenses that jeopardized both public safety and national security,” said Principal Deputy Assistant Attorney General Brent S. Wible.

Blender.io operated between 2018 and 2022, advertising its services on forums with claims of a “No Logs Policy.” The platform promised to erase any transaction records. 

Also, it required no registration or personal information, stating that users’ identities could not be traced. 

After Blender.io ceased operations in 2022, Sinbad.io launched as a similar Bitcoin mixing service. It continued to offer anonymized transactions until it was taken offline by law enforcement on November 27, 2023.

The Department of Justice worked with Dutch prosecutors to investigate and bring charges against the accused. All three individuals are now set to face trial.

“On November 2023, OFAC sanctioned Sinbad.io, publicly citing its use by a DPRK state-sponsored hacking group and cybercriminals to obfuscate transactions linked to other criminal offenses. However, we did not rest with this initial success. We maintained our focus on identifying the individuals responsible for its development and ensuring their accountability,” said Sean Burke, Special Agent of FBI Atlanta

Ongoing Scrutiny of Crypto Mixers

Crypto mixing services have faced growing criticism for facilitating money laundering. Governments worldwide have targeted these platforms to curb illicit financial activities. 

In 2023, the US Treasury introduced proposals to impose stricter record-keeping and reporting requirements on mixers. 

Similarly, South Korean authorities announced plans in 2024 to crack down on these services, particularly due to their use by North Korean hackers.

Also, the US Treasury previously sanctioned Tornado Cash, one of the largest crypto mixers. However, a federal appeals court surprisingly overturned those sanctions in late 2024. 

Meanwhile, Coinbase has also defended the legitimate applications of crypto mixers. The exchange argues that these platforms offer privacy for lawful transactions and are not solely tools for criminal activity.

The case against Blender.io and Sinbad.io reflects the ongoing challenges regulators face in balancing financial privacy and combating illicit activities in the cryptocurrency industry.