A North Korean bank official has been charged in cryptocurrency laundering conspiracies, according to two recently unsealed federal indictments. Sim Hyon Sop, a representative of the North Korean Foreign Trade Bank (FTB), is alleged to have laundered funds that were "stolen from virtual asset service providers," violating current sanctions against North Korea by both the US and United Nations.
Sim reportedly transferred the stolen funds into US dollars and used them to purchase goods with the help of a group of over-the-counter crypto traders. The recent indictments are part of a broader pattern of North Korean workers using virtual private networks (VPNs) and other tools to illegally gain remote employment and redirect revenue to North Korea.
North Korean operatives have also orchestrated various crypto-focused hacks in recent years, making off with an estimated $1.7 billion in cryptocurrency in 2022 alone, according to a release by the US Treasury Department. The North Korean hackers also gained access to approximately $75 million in virtual currency via a phishing campaign in late 2017, per the first indictment.
As part of the second indictment, Sim was charged with conspiring with a group of North Korean IT workers to launder approximately $12 million in illegally-earned wages from IT development work in the US. The workers assumed fake identities to gain employment at blockchain development firms based in the US and abroad between 2021 and March 2023.
The workers requested that their salaries be paid in cryptocurrency, particularly stablecoins like USD Tether and USD Coin, via US-based crypto exchanges. They allegedly worked with Sim to launder their earnings and redirect them to North Korea, partly to "generate revenue for North Korea's ballistic missile and WMD programs," according to the indictment.
North Korea has been running tests of its intercontinental ballistic missiles nearly every month this year, with the latest test taking place in mid-April. The FBI is still investigating the crypto laundering cases, and the money laundering charges are punishable by up to 20 years in prison. However, Sim and others charged are unlikely to face trial, as they were reportedly based in China and Hong Kong when the alleged crimes occurred, and the US has no existing extradition treaty with China.
Kenneth A. Polite, Jr., Assistant Attorney General in the DOJ's criminal division, stated that the charges announced are in response 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." The DOJ 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.
This news highlights the growing importance of regulating cryptocurrency transactions and enforcing international sanctions. Cryptocurrencies have become increasingly popular among criminals due to their anonymity and ease of use, making it essential for regulators to stay vigilant in detecting and preventing criminal activity. As virtual assets continue to grow in popularity, it is crucial to establish and enforce regulations to prevent illicit use and promote transparency in financial transactions.
