How Cryptocurrency Mixing Services Enable North Korea’s Money Laundering Operations

When you send Bitcoin from one wallet to another, the whole world can see it. Not your name, not your address - but the flow of money, every transaction, every link. That’s the problem North Korea’s cyber units exploit. They don’t need to hide who they are. They just need to hide where the money went. And that’s where cryptocurrency mixing services come in.

What Are Cryptocurrency Mixing Services?

Cryptocurrency mixers, also called tumblers, are tools designed to break the trail of blockchain transactions. Imagine you hand over $100 in cash to a stranger. They mix it with $100 from ten other people, then give you back $100 - but not your exact bills. You can’t tell which bills came from you. That’s what mixers do with Bitcoin, Ethereum, and other coins.

The process is simple: you send your coins to a mixer. It pools them with coins from dozens or hundreds of other users. Then, after shuffling them around using complex algorithms, it sends back the same amount - but to a new address you control. The original source? Gone. The trail? Broken.

Mixers charge a fee - usually 1% to 3% - to cover costs and make a profit. Some even let you delay the payout to make tracing even harder. The goal isn’t just privacy. It’s invisibility.

Centralized vs. Decentralized Mixers

There are two kinds of mixers: centralized and decentralized. Most of the ones used by bad actors are centralized.

Centralized mixers are run by companies. You send your coins to their wallet. They hold them. They shuffle them. Then they send them back. Sounds simple, right? But here’s the catch: they keep records. If they’re hacked, if they’re forced to hand over logs, or if they turn informant - your coins and your identity are exposed.

Decentralized mixers don’t work that way. They use smart contracts and cryptography - like CoinJoin or zk-SNARKs - to mix coins without a middleman. No one holds your funds. No one keeps logs. Your coins get mixed with others through automated, trustless protocols. These are harder to shut down. Harder to trace. And far more dangerous for regulators.

North Korea’s hackers don’t care about convenience. They care about survival. And decentralized mixers give them that.

How North Korea Uses Mixers to Launder Crypto

North Korea doesn’t have banks. It doesn’t have access to the global financial system. But it has hackers. And it has stolen over $3 billion in cryptocurrency since 2017, according to Chainalysis.

These aren’t random thefts. They’re systematic. Groups like Lazarus Group target exchanges, DeFi platforms, and crypto bridges. They drain wallets. Then they move the coins through a chain of mixers.

Here’s how it works in practice:

1. They steal $5 million in ETH from a DeFi protocol.
2. They send half to a centralized mixer like Blender.io (now shut down by the DOJ).
3. The mixer sends it to five different addresses, each with a small amount.
4. Each of those five addresses sends coins to another mixer - this time a decentralized one like Wasabi Wallet or Tornado Cash.
5. Finally, the coins are converted to privacy coins like Monero, or cashed out through peer-to-peer traders in Southeast Asia.

The entire process can take days. Sometimes weeks. But by the end, the money is clean. No one can prove it came from a North Korean hack.

And here’s the kicker: most of the time, they don’t even need to use the same mixer twice. They rotate services. Use new ones. Burn the old ones. The mixers themselves don’t care where the money comes from. They just want their fee.

Why Regulators Can’t Stop It

The U.S. Treasury and the DOJ have cracked down. They’ve shut down Blender.io. They’ve sanctioned Tornado Cash. They’ve arrested developers.

But it’s like playing whack-a-mole.

Every time one mixer gets taken down, three new ones pop up - often hosted on servers in countries with no extradition treaties. Some operate out of Russia. Others are run by anonymous teams in Eastern Europe. A few are even coded by North Korean engineers themselves, hidden behind layers of proxies and encrypted forums.

The problem isn’t just the tech. It’s the law.

Most mixers claim they’re just for privacy. They say they’re used by journalists, activists, or people in repressive regimes. And sometimes, that’s true. But that’s also the perfect cover. Regulators can’t ban privacy. So they go after the operators - and even then, they struggle to prove criminal intent.

In 2022, the DOJ indicted four Russians for running Blender.io. But the indictment didn’t show they knew the money was from North Korea. It showed forum posts. It showed vague chat logs. It didn’t show a single transaction linking them to a DPRK hack.

That’s the loophole. Mixers don’t need to know the money is dirty. They just need to mix it.

The Real Risk: Trustless Systems That Can’t Be Trusted

Decentralized mixers are the biggest threat - not because they’re illegal, but because they’re unstoppable.

No company runs them. No CEO can be arrested. No server can be seized. The code is open. Anyone can run a node. Anyone can join a pool. And the more people use it, the stronger the anonymity becomes.

Tornado Cash, for example, processed over $7 billion in transactions before being sanctioned. Even after the U.S. blacklisted it, developers rebuilt it under new names. The code still works. The mixers still run. The money still flows.

North Korea doesn’t need to control the system. They just need to use it.

And they do - constantly.

What This Means for the Crypto Industry

Crypto exchanges are caught in the middle.

They have to comply with AML rules. They have to flag suspicious transactions. But if they block every mixer-related address, they block millions of legitimate users. Privacy advocates cry foul. Regulators demand action.

Some exchanges now use blockchain analytics firms like Chainalysis or Elliptic to screen transactions. But even those tools struggle with advanced mixing. Once coins pass through three or four layers of decentralized mixers, the trail vanishes.

The result? Many exchanges are pulling out of high-risk regions. Others are freezing accounts with no explanation. And users? They’re left wondering: is privacy a right - or a red flag?

The Future: Can We Stop It?

There’s no easy answer.

Some say ban all mixers. But that’s like banning encryption. It won’t work. It’ll just push users to darker, unregulated tools.

Others say improve tracing tech. But mixers are evolving faster than detection. Zero-knowledge proofs, private transactions, and coin aggregation techniques are now standard in modern privacy coins.

The only real solution? Global cooperation. North Korea doesn’t care about U.S. sanctions. But if China, Russia, and Iran stop letting crypto flow through their borders - if their exchanges refuse to cash out DPRK-linked coins - then the money can’t go anywhere.

So far, that hasn’t happened.

Until it does, North Korea will keep stealing. And mixers will keep hiding it.

What You Should Know

If you’re using crypto:

• Don’t use mixers unless you absolutely need to - and even then, understand the risks.
• Exchanges may freeze your funds if you interact with a known mixer - even if you didn’t steal anything.
• Privacy tools aren’t inherently illegal. But when used to hide stolen funds, they become weapons.
• North Korea isn’t the only threat. Criminals, ransomware gangs, and fraudsters use the same tools.

The line between privacy and crime is thin. And right now, it’s being exploited by a nation that doesn’t play by any rules.