A Washington, D.C., district court on Monday unsealed two federal indictments that allegedly implicate a North Korean bank official in schemes to launder cryptocurrency.
In the first indictment, Sim Hyon Sop (Sim), a representative of the North Korean Foreign Trade Bank (FTB), is accused of laundering money stolen from virtual asset service providers, converting the money into dollars, and then using those dollars to make purchases with a group of over-the-counter cryptocurrency traders, according to a court document. The alleged behavior violates the United States’ and the United Nations’ ongoing sanctions against North Korea.
The indictments that were just made public are part of a larger trend in recent years whereby North Korean labourers have used virtual private networks (VPNs) and other tools to work illegally from home and send money back to their country.
According to a statement by the US Treasury Department, agents acting on behalf of the nation have also planned other hacks with a focus on cryptocurrencies in recent years, stealing an estimated $1.7 billion in cryptocurrencies in 2022. Furthermore, according to the first charge, North Korean hackers used a phishing effort to steal almost $75 million in virtual currency in late 2017.
Sim was accused of planning to launder approximately $12 million in unlawfully acquired pay from IT development work done in the United States with a group of North Korean IT professionals as part of the second indictment. Between March 2021 and March 2023, the employees are accused of using false identities to work for blockchain development companies with locations both domestically and abroad.
According to the indictment and a statement by the U.S. Department of Justice, the IT professionals requested that their salaries be paid via U.S.-based cryptocurrency exchanges in cryptocurrencies, such as stablecoins like USD Tether and USD Coin. Following that, they reportedly collaborated with Sim to launder the profits and send them to North Korea, in order to generate revenue for North Korea’s ballistic missile and WMD programs, according to the indictment.
North Korea has tested its intercontinental ballistic missiles almost every month so far this year, with the most recent test occurring in mid-April.
According to the DOJ announcement, money laundering offences carry a potential 20-year jail sentence, even though the FBI is still looking into cases involving crypto-currency laundering. Sim and the other accused are not likely to stand prosecution because they were purportedly based in China and Hong Kong at the time the alleged crimes were committed and because the United States and China do not currently have an extradition agreement.
According to a release from Kenneth A. Polite, Jr., Assistant Attorney General in the DOJ’s criminal division, the allegations made public today are a response to North Korean operatives’ cunning attempts to get around sanctions by exploiting the technological capabilities of virtual assets to ease transactions, profit, and targeting virtual currency enterprises for theft. By tracking the money on the blockchain and shedding light on their actions, they will keep trying to disrupt and discourage North Korean actors and those who support them.
