US Charges North Korean Banker Over Crypto Laundering Conspiracies

DOJ says the stolen funds were used to buy goods for North Korea's regime

The Department of Justice in Washington on Jan. 14, 2020. Samira Bouaou/The Epoch Times

The United States has indicted a North Korean banker for his alleged role in cryptocurrency laundering conspiracies designed to buy goods and generate revenue for the North Korean regime.

Sim Hyon Sop, a representative of the North Korean Foreign Trade Bank (FTB), was accused of conspiring with over-the-counter crypto traders to launder funds stolen from “virtual currency exchange hacks.”

The laundered funds were then transferred in U.S. dollars for purchasing goods through Hong Kong-based front companies on behalf of North Korea, the Department of Justice said in a statement on April 24.

Sim, 39, was also charged with conspiring with North Korean IT workers who obtained illegal employment at U.S. blockchain development companies to generate revenue for North Korea, according to the DOJ.

The IT workers allegedly used fake identities to secure remote jobs at U.S.-based companies and requested payment in cryptocurrencies—in stablecoins like USD Tether and USD Coin—and sent their earnings back to North Korea with Sim’s assistance.

The DOJ stated that North Koreans apply for jobs in remote IT work without revealing their nationality. They bypass security and due diligence checks using false identification and other obfuscation strategies, such as virtual private networks, to hide their real location.

“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 Kenneth A. Polite, assistant attorney general in the DOJ’s Criminal Division.

Wu Huihui, a Chinese national and alleged co-conspirator in the money laundering scheme, was also charged with running an unlicensed money-transmitting business. The DOJ stated that Wu conducted over 1,500 trades for American customers without a license.

“Today’s indictments reveal North Korea’s continued use of various means to circumvent U.S. sanctions,” U.S. Attorney for the District of Columbia, Matthew M. Graves, said in a statement.

“We can and will follow the money, be it through cryptocurrency or the traditional banking system, to bring appropriate charges against those who would help to fund this corrupt regime,” Graves added.

US Sanctions 3 Individuals Linked to Lazarus

In a separate statement, the U.S. Treasury Department said it sanctioned Sim, Wu, and Cheng Hung Man, a Hong Kong-based trader, for allegedly providing support to North Korean hacking group Lazarus.

Lazarus is led by North Korea’s primary intelligence agency, the Reconnaissance General Bureau. The group was responsible for the theft of $620 million in Ethereum from the online game Axie Infinity last year.

“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 (WMD) and ballistic missile programs directly threatens international security,” said Brian E. Nelson, under secretary of the Treasury for terrorism and financial intelligence, referring to North Korea’s official name, the Democratic People’s Republic of Korea.

A test launch of a new solid-fuel intercontinental ballistic missile (ICBM) Hwasong-18 at an undisclosed location in this still image of a photo used in a video released by North Korea's Korean Central News Agency (KCNA) on April 14, 2023. KCNA via Reuters TV

According to the Treasury, North Korea has been generating funds for its illicit ballistic missile and weapons of mass destruction programs through virtual currency thefts and fraud schemes since 2017, having stolen an estimated $1.7 billion worth of virtual currency last year.

North Korea conducted a series of missile launches this year, including one involving a solid-fuel intercontinental ballistic missile (ICBM), the Hwasong-18, all of which are banned under U.N. Security Council resolutions on North Korea’s missile program.

The United States has persisted in engaging in “direct talks” with North Korea without preconditions in favor of a diplomatic solution, but North Korea has rebuffed these efforts.