Four Russian nationals behind cryptocurrency mixing services Blender.io and Sinbad.io were charged with money laundering and operating unlicensed money transmission businesses.
The news follows sanctioned crypto mixer Blender.io relaunching as Sinbad.io in late November 2023. The move was quickly followed by United States authorities going after the new entity as well.
The Jan. 10 indictment charges Alexander Evgenievich Oleynik, Roman Vitalyevich Ostapenko, and Anton Vyachlavovich Tarasov for operating crypto mixers Blender.io and Sinbad.io. The charges allege they are responsible for laundering funds from illegal activities. The court case highlights multiple high-profile transactions involving the crypto mixing services in question.
In early November 2021, a transfer of about 0.385 Bitcoin (BTC) (worth approximately $24,000 at the time) of ransomware proceeds went through Blender.io. In early June 2023, 5.409 Bitcoin worth at $147,136 made its way through Sinbad.io. According to the indictment, the funds were tied to wire fraud and illegal transactions involving access device fraud.
In a recent post, Eric Rosen, partner at Boston law firm Dynamis, claimed that the document “provides virtually no clue as to how the charged defendants are guilty of money laundering.” Instead, he argued, "it is guilt by association—tainted money went through the mixers, and therefore, the defendants are guilty of money laundering.”
According to Rosen, the Department of Justice withheld “all actual criminal allegations and instead presumes “knowledge” of the underlying frauds by the defendants.” Furthermore, he noted that “there are few, if any, concrete allegations tying the underlying criminal activity to the United States,” which raises jurisdictional issues and extraterritoriality.
Niko Demchuk, Head of Legal at crypto compliance firm AMLBot, told Decrypt that the charges are the "consequence of the precedent set when the founders of the Tornado Cash mixer were charged with money laundering.” He explained that the case “paved the way for any mixer founder to be charged with money laundering in the USA.”
The case follows 2024 being widely recognized as the year of war on digital privacy in cryptocurrency. Privacy serves as the very foundation of the cryptocurrency movement, with the crypto anarchist manifesto by cypherpunk Timothy May—which predates Bitcoin itself—predicting scenarios now made possible with crypto.
New York Judge Rules Tornado Cash Co-Founder Roman Storm Must Face Trial in Money Laundering Case
A U.S. district court judge ruled Thursday that the money laundering case against Roman Storm shall proceed, denying the Tornado Cash co-founder’s motion to dismiss the high-profile case. The ruling delivered by Judge Katherine Polk Failla in the Southern District of New York found that prosecutors plausibly charged Storm with conspiring to operate an unlicensed money transmitter, facilitating money laundering and sanctions evasion in operating the coin-mixing service. Notably, Failla’s ruling...
He expected that technology was about to allow “individuals and groups to communicate and interact with each other in a totally anonymous manner.” Then, “two persons may exchange messages, conduct business, and negotiate electronic contracts without ever knowing the True Name, or legal identity, of the other.”
May himself admitted that “anonymous computerized market will even make possible abhorrent markets for assassinations and extortion,” and that “various criminal and foreign elements will be active users” of such networks. Still, he claimed that “this will not halt the spread of crypto anarchy” and “it surely will be both a social and economic revolution.”
Fifth Circuit Rules OFAC Overstepped in Sanctioning Tornado Cash's Immutable Smart Contracts
The U.S. Fifth Circuit Court ruled Tuesday that the Treasury overstepped by sanctioning Tornado Cash’s immutable smart contracts, stating the autonomous software cannot be classified as property. The Fifth Circuit held that when smart contracts are immutable—meaning no entity can modify or control them—they cannot be classified as "property" subject to sanctions under existing law. The decision reverses a lower court ruling and marks a significant win for privacy advocates and blockchain develop...
Much of crypto has toned down this early vision, and many view know-your-customer and anti-money laundering measures positively or, at least, as necessary evils. Despite this, many view some government actions against crypto mixers as overreaching.
For example, U.S. sanctions on Tornado Cash were later deemed illegal because the decentralized crypto mixer had no central person or group in charge of it. The dropped sanctions led to the project’s developer, Roman Storm, initiating a motion to dismiss the charges against him.
Edited by Stacy Elliott.
