US Charges North Korean In Crypto Laundering Conspiracies

April 26, 2023 TH Author headline,government,usa,cybercrime,fraud,cryptography,north korea

The Department of Justice unsealed two federal indictments on April 24 charging a North Korean Trade Bank representative with money laundering conspiracies using cryptocurrency designed to generate revenue for the North Korean government.

Sim Hyon Sop, 39, was charged for conspiring with three cryptocurrency traders to launder stolen funds from virtual currency exchange hacks to buy goods for North Korea.

“The charges announced today respond to innovative attempts by North Korean operatives to evade sanctions by exploiting the technological features of virtual assets to facilitate payments and profits, and targeting virtual currency companies for theft,” said Assistant Attorney General Kenneth A. Polite Jr., of the Justice Department’s Criminal Division.

Sim was also charged with conspiring with North Korean tech workers to raise money through illegal employment at U.S. blockchain development companies via remote work that they gained by using fake identities.

The government alleges Sim laundered the funds from the IT workers, who asked for payment via cryptocurrency for the benefit of the North Korean regime, which violated sanctions imposed against North Korea by the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the United Nations to impede the progress of North Korea’s ballistic missiles programs.

As part of its cyber campaign, North Korean hackers have executed virtual currency-related thefts since at least 2017 to generate revenue for the regime, including through the hacking of virtual asset services providers, such as virtual currency exchanges, according to a DoJ press release. A portion of the proceeds from those virtual currency theft and fraud schemes was sent to virtual currency address 1G3Qj4Y4trA8S64zHFsaD5GtiSwX19qwFv, which Sim and his trader coconspirators used to fund payments for goods for North Korea.

A third indictment also unsealed April 24 in the District of Columbia separately charged Chinese national Wu Huihu with operating an unlicensed money transmitting business. According to court documents, Wu operated as an over the counter trader on a U.S.-based virtual currency exchange and conducted over 1,500 trades for U.S. customers without obtaining the necessary licenses.

The FBI Chicago Field Office and FBI’s Virtual Assets Unit (VAU) are investigating the cases.

“The DPRK’s use of illicit facilitation networks to access the international financial system and generate revenue using virtual currency for the regime’s unlawful weapons of mass destruction and ballistic missile programs directly threatens international security,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson in a separate press release. “The United States and our partners are committed to safeguarding the international financial system and preventing its use in the DPRK’s destabilizing activities, especially in light of the DPRK’s three launches of intercontinental ballistic missiles this year alone.”