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Did Digital Currency Group Profit From $60 Million In North Korean Crypto Money Laundering?

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In the world of cryptocurrency privacy is a huge issue. For those with something to hide, so called cryptocurrency mixers exist to cloak the identity of owners by scrambling the digital currency in pools, disassociating it from the original crypto wallets, and making it nearly impossible to know the original source of funds. In 2022, perhaps the most notorious mixer, Tornado Cash, was blacklisted by the U.S. Department of Treasury for allegedly money laundering billions of dollars for criminals, including the group fronting for North Korea.

U.S. law enforcement authorities say a North Korean-hacker outfit known as the Lazarus Group has been using mixers including Blender.io, Tornado Cash, Railgun and Sinbad.io, to launder stolen crypto. The chart below shows that mixers have been used to launder over $700 million in stolen funds from blockchain-based applications such as the online game Axie Infinity, Atomic Wallet, and Harmony Bridge, which is a tool that lets users move tokens from the Harmony blockchain to other major networks like Ethereum. According to reporting from the Wall Street Journal, Lazarus has stolen over $3 billion worth of crypto.

Source: FBI, U.S. Department of the Treasury data compiled by Forbes

The Harmony hack stands out from the others because U.S. law enforcement authorities have not sanctioned Railgun, unlike the other mixers mentioned above. The Treasury did not respond to a request for comment about Railgun. However, new information suggests that Digital Currency Group (DCG), owner of $25 billion crypto fund manager Grayscale, likely benefited from the laundering through Railgun. A two-month Forbes investigation supported by data from blockchain intelligence firm ChainArgos shows that DCG received $436,906 in fees from Railgun from June 2023 to the present. This figure represents 18% of the $2.4 million that Railgun paid out. According to Elliptic, mixer Railgun may have been involved in as much as $60 million worth of laundering for Lazarus Group in 2023.

A company spokesperson for DCG declined to comment on this story. Multiple requests for comment sent to Railgun went unanswered.

The Harmony Hack

In June 2022, according to the FBI, North Korea’s Lazarus Group stole $100 million worth of crypto, including ether, USDC, WBTC, and 11 other tokens, from blockchain bridge Harmony. It obtained the funds by compromising the password of one........

© Forbes


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