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N. Korean National Indicted Over Sprawling Crypto Laundering Scheme

The U.S. continued its digital cold war against international actors allegedly using cryptocurrency to mask illicit activities. To that end, the U.S. Department of Justice (DOJ) indicted Sim Hyon Sop, a North Korean Foreign Trade Bank representative, on multiple charges he used cryptocurrency to launder money to assist the Democratic People’s Republic of Korea to skirt sanctions.

The first indictment, which was unsealed in the District of Columbia, accuses the North Korean national of working with crypto traders to use stolen money to make purchases on North Korea’s behalf.

“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 DOJ’s criminal division. “We will continue to work to disrupt and deter North Korean actors and those who aid them by following the money on the blockchain and shining a light on their conduct.”

Per court documents, the illegal activities took place on behalf of North Korea’s clandestine Reconnaissance General Bureau said to be operating under hacker organizations the Lazarus Group and Advanced Persistent Threat 38.

From Twitter

The Kobeissi Letter @KobeissiLetter ·Apr 18

"Over the last week:

  1. US says there’s evidence that China wants to weaken the US dollar
  2. Coinbase considers leaving US if regulatory issues persist
  3. UAE says they will accept crypto firms
  4. Treasury Secretary Yellen says sanctions on Russia put US Dollar dominance at risk
  5. Brazil calls for end to US Dollar’s trade dominance

Events threatening the US Dollar have become a daily occurrence."

The second accusation alleges Sim conspired with North Korean tech workers to launder money illegally obtained through their fraudulent employment at U.S. blockchain companies. Ultimately, say U.S. officials, the scheme was designed to assist North Korea evade sanctions imposed by the United Nations and the Department of the Treasury’s Office of Foreign Assets Control aimed at inhibiting the research and development of ballistic weapons and other programs.

“As criminals engage in new methods of exploiting and laundering cryptocurrency, the FBI will continue to relentlessly pursue them and bring them to justice,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “These individuals used their illicit criminal activity to aid the Democratic People’s Republic of Korea. Today’s indictment demonstrates the power of strong investigative work and collaboration amongst partners in holding state operatives accountable.”

The DOJ detailed a complex operation involving Chinese national Wu Huihu, Hong Kong British National Cheng Hung Man and an anonymous crypto user identified as “Jammy Chen” to launder stolen cryptocurrency by making purchases through “Hong Kong-based front companies” and facilitating payments using additional sham companies.  

From Twitter

Preston Byrne @prestonjbyrne ·Apr 17

"The US’ anti-crypto efforts are typical perverse late stage empire stuff. Instead of recognizing that the world is going to be very different in fifty years, they’re trying to tighten their control through sanctions and tech bans. It’s a losing battle."

“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 Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence. “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 (ICBMs) this year alone.”

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