Meet the creator of North Korea’s favorite crypto privacy service
But in the US criminal cases against blending service administrators, at least the Justice Department has argued that the services knowingly conspired with criminals. In the Bitcoin Fog cases, for example, prosecutors say undercover agents told the service they were trying to launder profits from dark-web drug sales, and Bitcoin Fog completed their transactions anyway. Helix advertised its services on the website of dark-web drug marketplace AlphaBay.
Mehdi, on the other hand, claims he was unaware that the $25 million in allegedly dirty crypto-chain analysis was sent to Sinbad by North Korean hackers: These funds were stolen, Mehdi points out, in the form of the cryptocurrency Ether and only later. exchanged for bitcoins, the only cryptocurrency Sinbad accepts. “I could not possibly have known about the funds’ sources,” writes Mehdi.
Chainalysis’ Plante speculates that the North Korean hackers may have chosen Sinbad in part because of the novelty. Because it only recently appeared online, she says many investigators have yet to identify the Bitcoin addresses, making the mix-up much more difficult to trace. Plante declined to say whether Chainalysis had been able to defeat the service’s own mixing, potentially tracking users’ coins despite Sinbad’s privacy assurances — a feat the company says it has achieved with some other cryptocurrency mixing services in the past.
But Nick Carlsen, an investigator at another cryptocurrency tracking firm, TRM Labs, argues that Sinbad is probably too small to act as an effective mixer: The fewer users and the smaller the money supply, the easier it is to separate the transactions and track them . the money. And that thin layer of temporary anonymity may be all North Korean hackers seek, given that they are usually based in North Korea or China, well beyond the reach of Western law enforcement. “The typical MO of the North Koreans is not to achieve the kind of anonymity that any other hacker needs,” says Carlsen. “They’re usually just trying to buy themselves a few hours of breathing space to carry out the next phase of the money laundering.”
As for whether Mehdi himself might be identified, prosecuted, arrested or sanctioned, he told WIRED that he remains relatively confident about his own fate. He shared a long list of cryptocurrency mixing services on the BitcoinTalk forum, pointing out that relatively few have met these results. “It would be foolish not to worry about it at all. I take all necessary precautions to protect my anonymity,” he wrote — especially before Elliptic’s revelation that Sinbad and Blender might be connected — but he added that ” I expect to remain part of the market and not become one of the unfortunate exceptions.”
Amid an ongoing crackdown on crypto-laundering services, there’s no doubt that Sinbad’s high-wire act is riskier than ever – especially as the North Korean users paint an ever-larger target on their backs.
Updated 1:45 PM ET, February 13, 2023 with new elliptical findings about Sinbad.io.
