North Korean Foreign Trade Bank Representative Charged With Crypto Laundering Conspiracies | Takeover bid

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Two federal indictments were unveiled today in the District of Columbia charging a North Korean Foreign Trade Bank (FTB) official for his role in separate money laundering conspiracies to generate revenue for the Republic Democratic People’s Republic of Korea through the use of cryptocurrency.

The charges announced today respond to groundbreaking attempts by North Korean agents to evade sanctions by exploiting the technological characteristics of virtual assets to facilitate payments and profits, and by targeting virtual currency companies for theft, a said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. We will continue to work to disrupt and deter North Korean actors and those who help them by tracking money on the blockchain and exposing their conduct.

According to court documents, 39-year-old Sim Hyon Sop (Sim) is accused of conspiring with over-the-counter (OTC) cryptocurrency traders to use stolen funds to buy goods for North Korea and d conspiring with North Korean computer scientists to generate income through illegal employment at blockchain development companies in the United States.

The first indictment relates to a conspiracy between Sim and three over-the-counter traders to launder funds stolen from virtual currency exchange hacks in order to make US dollar payments for goods on behalf of the North American government. Korean. The second involves a conspiracy between Sim and various North Korean computer scientists to launder the proceeds of illegal computer development work, where computer scientists obtained employment at American blockchain development companies using false identities and then laundered. their ill-gotten gains via Sim for the benefit of the North Korean regime, and in violation of sanctions imposed against North Korea by the Treasury’s Office of Foreign Assets Control (OFAC) Department and the United Nations. These sanctions were imposed to hinder North Korea’s ballistic missile development, weapons production, and research and development programs.

Today’s indictments reveal that North Korea continues to use various means to circumvent U.S. sanctions, said U.S. Attorney Matthew M. Graves of the District of Columbia. We can and will follow the money, whether through cryptocurrency or the traditional banking system, to bring appropriate charges against those who would help fund this corrupt regime.

According to court documents, North Korean national Sim, Chinese national Wu Huihu (Wu), British Hong Kong (Overseas) national Cheng Hung Man (Cheng) and online nickname user live:jammychen0150 ( Jammy Chen) conspired to launder stolen cryptocurrency and then used those funds to buy goods through Hong Kong-based front companies on behalf of North Korea. Sim directed these payments, which were made in US dollars, through Jammy Chen. Jammy Chen then recruited Wu and Cheng, who were both over-the-counter traders, to find fake front companies and facilitate payments to avoid US sanctions on North Korea.

As criminals engage in new methods of mining and laundering cryptocurrency, the FBI will continue to relentlessly pursue them and bring them to justice, said Deputy Director Luis Quesada of the Investigations Division. FBI criminals. These individuals have used their illicit criminal activities to help the Democratic People’s Republic of Korea. Today’s indictment demonstrates the power of strong investigative work and collaboration among partners to hold state agents accountable.

Sim also allegedly conspired to launder funds generated by North Korean computer scientists who obtained illegal employment in the tech and crypto industry. These IT workers used fake personas to get jobs, including jobs at US-based companies, and then demanded to be paid in cryptocurrencies, such as stablecoins like USD Tether (USDT) and USD Coin (USDC), which are pegged to the US dollar. . After receiving payment, they sent their earnings back to North Korea via Sim.

According to court documents, the Reconnaissance General Bureau (RGB) is North Korea’s main intelligence and clandestine operations unit, known to have a cyber capability that is known within the cyber security community as from Lazarus Group and Advanced Persistent Threat 38 (APT38). APT38 is a financially motivated North Korean regime-backed group responsible for carrying out destructive cyber attacks since at least 2014 to generate revenue for its ballistic missile and WMD programs. Specifically, these North Korean hackers have worked together to carry out cyberattacks against victims located in the United States and around the world, including hacks against financial institutions and virtual asset service providers. North Korean actors gained unauthorized access to these victim networks as part of their fraudulent scheme through various means, including through spear-phishing messages designed to trick victims into downloading and running malware developed by the Pirates.

Since 2017, as part of its cyber campaign, North Korean hackers have also executed virtual currency-related thefts to generate revenue for the regime, including hacking into virtual asset service providers, such as currency exchanges. virtual currencies. Some of the proceeds from these virtual currency theft and fraud schemes were sent to the virtual currency address 1G3Qj4Y4trA8S64zHFsaD5GtiSwX19qwFv, which Sim and his OTC merchant co-conspirators used to fund merchandise payments for North Korea.

To generate revenue for the regime, North Korea is also deploying IT workers to gain illegal employment in the cryptocurrency industry. According to court documents, North Koreans apply for remote IT development jobs without disclosing that they are North Korean. These IT people circumvent security and due diligence checks through the use of false or fraudulent identity documents and other obfuscation strategies, such as virtual private networks to hide their true location from online payment facilitators and to hiring platforms. IT people request payment for their services in virtual currency and then send their earnings back to North Korea via, among other methods, FTB representatives such as Sim.

A third indictment also unsealed today in the District of Columbia separately charges Wu with operating an unlicensed money transfer business. According to court documents, Wu operated as an OTC trader on a US-based virtual currency exchange and conducted more than 1,500 transactions for US customers without obtaining the necessary licenses.

The FBI’s Chicago Field Office and the FBI’s Virtual Assets Unit (VAU) are investigating the cases.

The charge of criminal conspiracy to launder monetary instruments carries a maximum sentence of 20 years in prison. The charge of operating an unlicensed money transfer business carries a maximum of five years in prison.

Trial Attorney Jessica Peck of the Department of Justice’s National Cryptocurrency Enforcement Team (NCET) and Computer Crime and Intellectual Property Section, Assistant US Attorneys Steven Wasserman and Christopher Tortorice for the District of Columbia and Trial Attorney Emma Ellenrieder of the National Security Divisions Counterintelligence and Export Control Section is prosecuting cases. Paralegal specialists Brian Rickers and Angela De Falco and legal assistant Jessica McCormick provided invaluable assistance. Significant assistance was also provided by the United States Attorney’s Office for the Central District of California, the FBI Los Angeles Field Office, the Criminal Divisions Money Laundering and Asset Recovery Section, the former IRS Criminal Investigation Special Agent Chris Janczewski and former FBI analyst Nick Carlsen.

The NCET was established in October 2021 to combat the growing illicit use of cryptocurrencies and digital assets. Under the oversight of the Criminal Division, the NCET conducts and supports investigations of individuals and entities that enable the use of digital assets to commit and facilitate a variety of crimes, with a particular focus on virtual currency exchanges, blending and tumbling services and infrastructure. suppliers. The NCET also sets strategic priorities regarding digital asset technologies, identifies areas requiring increased investigation and prosecution attention, and leads the department’s efforts to engage with domestic and foreign government agencies as well as the private sector to aggressively investigate and prosecute crimes involving cryptocurrency and digital assets. .

An indictment is only an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in court.

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