North Korean bank official charged in crypto laundering conspiracies
The first indictment charges Sim Hyon Sop (Sim), a representative of North Korean Foreign Trade Bank (FTB), with allegedly laundering funds “stolen from virtual asset service providers,” transferring the funds into U.S. dollars and using them to purchase goods, together with a group of over-the-counter crypto traders, according to the court filing. The alleged actions are in violation of current sanctions against North Korea by both the U.S. and United Nations.
The recently unsealed indictments represent a broader pattern in recent years of North Korean workers using virtual private networks (VPNs) and other tools to illegally gain remote employment and redirect revenue to North Korea.
Operatives working on behalf of the country have also orchestrated other crypto-focused hacks in recent years, making off with an estimated $1.7 billion in crypto in 2022, according to a release by the US Treasury Department. And in late 2017, hackers in North Korea gained access to approximately $75 million in virtual currency via a phishing campaign, per the first indictment.
Sim, as part of the second indictment, was charged with conspiring with a group of North Korean IT workers to launder about $12 million in illegally-earned wages from IT development work in the U.S. The workers allegedly assumed fake identities to gain employment at blockchain development firms based in the U.S. and abroad between 2021 and March 2023.
The IT workers requested that their salaries be paid in cryptocurrency – for instance, in stablecoins like USD Tether and USD Coin – via U.S.-based crypto exchanges, according to the indictment and a release by the U.S. Department of Justice. They then allegedly worked with Sim to launder the earnings and redirect them to North Korea, in part to “generate revenue for North Korea’s ballistic missile and WMD programs,” according to the indictment.
Nearly every month so far this year, North Korea has run tests of its intercontinental ballistic missiles, the latest taking place in mid-April.
While the FBI continues to investigate the crypto laundering cases, the money laundering charges are punishable by a maximum of 20 years in prison, according to the DOJ release. 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 U.S. has no existing extradition treaty with China.
“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,” Kenneth A. Polite, Jr., Assistant Attorney General in the DOJ’s criminal division, said in a release. “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.”