The anti-money laundering crusade has expanded significantly over recent years to address what has become an ever-evolving landscape on the global scale. The rapid, mainstream growth and adoption of notable cryptocurrency names such as Bitcoin and Ethereum by consumers and companies alike over the past decade have subsequently forced domestic and international regulators and law enforcement bodies to adjust their respective practices to both detect and deter criminal financial activity across what remains a widely unregulated platform. This process has to date remained an uphill battle, as the anonymity provided by these payment platforms as compared to traditional financial transactions have further contributed to difficulties in following potential money trails and bringing fraudsters operating in this sphere to justice.

            As cross-border cooperation continues to improve between these aforementioned international figures however, there have been several notable triumphs that have quantified growing anti-money laundering efforts as they pertain to the crypto realm. Over this period, the U.S. has also set their sights on the misuse of blockchain bridges (i.e. tools that allow you to connect two blockchain ecosystems for information and asset transfer) and cryptocurrency mixers/blenders – each of which have been abused by modern hackers and financial criminals for purposes of laundering ill-gotten funds. Blending services in particular have been on the radar of American financial authorities for several years now. These third-party platforms generally function as a means that make it more difficult to track individual transactions by pooling and subsequently mixing source funds with other funds before sending back an equivalent of blended funds to the users, shrouding the original sources of funds in anonymity. Recently, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) levied sanctions against Tornado Cash – a mixing platform tied to many cross-border criminal economic ventures and the alleged laundering of more than $7 billion worth of crypto since 2019. It appears that international authorities are staying on the offensive against these potentially-destabilizing entities. Last week a joint effort between the U.S. Department of Justice and the European police agency (EUROPOL) lead to the shutdown of ChipMixer – a darkweb crypto-blending platform long-popular for providing services to criminal groups and individuals looking to launder illicit funds often gained from ransomware attacks and other fraudulent activities. Thus far, the revelations emerging from this investigation are staggering. United States prosecutors have alleged that ChipMixer has laundered upwards of $3 billion dollar for criminals since its inception in 2017.

            “ChipMixer facilitated the laundering of cryptocurrency, specifically Bitcoin, on a vast international scale, abetting nefarious actors and criminals of all kinds in evading detection,” U.S. Attorney Jacqueline C. Romero said in a statement following the seizure. “We cannot and will not allow criminals’ exploitation of technology to threaten our national and economic security.”² U.S. authorities were able make a connection between ChipMixer and the infamous $540 million hack of the online game “Axie Infinity”. In this instance, North Korean hackers from the notorious criminal syndicate known as Lazarus Group utilized fraudulent job interviews to infiltrate the game developer’s systems and pull the rug right out from underneath them. There was also a link discovered between ChipMixer and the recent hack of Horizon Bridge for an additional $100 million. Unsurprisingly, the recent scandal with FTX and embattled founder Sam Bankman-Fried also has a connection to ChipMixer. As FTX was just barely clinging to life, multiple “unauthorized transactions” resulted in the draining of a reported $473 million by thieves. U.S. authorities allege that much of the money that was allegedly pilfered was ultimately laundered through ChipMixer. All told, digital currency tracking service Elliptic said ChipMixer had been used to launder over $844 million in Bitcoin that it tied directly to illicit activity – including at least $666 million from cryptocurrency thefts.¹

            So who is behind this crypto enterprise? U.S. prosecutors seem to know, as in wake of the shutdown they officially filed federal charges against a 49-year-old Vietnamese man named Minh Quoc Nguyen for allegedly operating ChipMixer. He is now facing charges of money laundering, operating an unlicensed money-transmitting business and identity theft, and is now wanted by the Federal Bureau of Investigation as he remains at large. Authorities believe that Mr. Nguyen was essentially enticing criminals to utilize his platform to launder illicit funds to line his own pockets, purposefully designing ChipMixer to obfuscate any trails to follow to allow users to preserve their anonymity. In fact, it is alleged that he bluntly stated so on a popular cryptocurrency message board back in 2017.“If you want to hide who you are?” Nguyen allegedly wrote, boasting about his platform, “ChipMixer is the perfect way.”² Global RADAR will provide updates on this case in the weeks to follow.

Citations

1. Kar-Gupta , Sudip, and Raphael Satter. “Cybercriminals’ Crypto Platform ChipMixer Seized in International Operation.” Reuters, Thomson Reuters, 15 Mar. 2023. 
2. Roebuck, Jeremy. “Philly Feds Help Dismantle Popular Crypto Money-Laundering Site Responsible for Cleaning $3 Billion in Illicit Funds.” Https://Www.inquirer.com, The Philadelphia Inquirer, 16 Mar. 2023.