Two federal indictments were unsealed today in the District of Columbia charging a representative of the North Korean Foreign Trade Bank (FTB) with his role in separate money laundering conspiracies designed to generate revenue for the Democratic People's Republic of Korea. through the use of cryptocurrencies.
โThe charges announced today respond to innovative attempts by North Korean agents to evade sanctions by exploiting the technological features of virtual assets to facilitate payments and earnings, and targeting virtual currency firms for theft.โ 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 shedding light on their conduct."
According to court documents, 39-year-old Sim Hyon Sop (Sim) is charged with allegedly conspiring with over-the-counter (OTC) cryptocurrency dealers to use stolen funds to purchase goods for North Korea and conspiring with Korean IT workers. del Norte to generate income through illegal employment in blockchain development companies in the United States.
The first indictment involves a conspiracy between Sim and three OTC merchants to launder stolen funds from virtual currency exchanges to make US dollar payments for goods on behalf of the North Korean government. The second involves a conspiracy between Sim and several North Korean IT workers to launder the proceeds of illegal IT development work, where IT workers obtained employment at US blockchain development companies using false identities and they then laundered their ill-gotten gains through Sim for profit. of the North Korean regime, and in contravention of the sanctions imposed against North Korea by the Office of Foreign Assets Control (OFAC) of the Treasury Department and the United Nations. Those sanctions were imposed to prevent North Korea's ballistic missile development, weapons production, and research and development programs.
"Today's indictments reveal North Korea's continued use of various means to circumvent US sanctions," said United States Attorney Matthew M. Graves for the District of Columbia. "We can and will 'follow the money', whether through cryptocurrency or the traditional banking system, to bring the appropriate charges against those who would help finance this corrupt regime."
According to court documents, North Korean national Sim, Chinese national Wu Huihu (Wu), British Hong Kong national (overseas) Cheng Hung Man (Cheng) and user of the online nickname live:jammychen0150 ("Jammy Chen ") conspired to launder stolen cryptocurrency and then use those funds to purchase 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". โJammy Chenโ then recruited Wu and Cheng, both OTC traders, to find fake front companies and facilitate payments to bypass US sanctions against North Korea.
โAs criminals engage in new methods to mine and launder cryptocurrency, the FBI will continue to relentlessly pursue them and bring them to justice,โ said Deputy Director Luis Quesada of the FBI's Criminal Investigation Division. โThese people used their illegal criminal activity to help the Democratic People's Republic of Korea. Today's indictment demonstrates the power of strong investigative work and collaboration between partners to hold state agents accountable."
Sim also allegedly conspired to launder funds generated by North Korean IT workers who obtained illegal jobs in the technology and cryptocurrency industry. These IT workers used fake personas to get jobs, including jobs at US-based companies, and then asked to be paid in cryptocurrencies, such as stablecoins like USD Tether (USDT) and USD Coin (USDC), which They are pegged to the US dollar. . After receiving the payment, they funneled their profits to North Korea via Sim.
According to court documents, the General Reconnaissance Bureau (RGB) is North Korea's main clandestine operations and intelligence unit, known for having a cyber capability that is known within the cybersecurity community as Lazarus Group and Advanced Persistent Threat 38 ( APT38). . APT38 is a financially motivated North Korean regime-backed group responsible for conducting destructive cyberattacks since at least 2014 to generate revenue for its ballistic missile and weapons of mass destruction 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 attacks against financial institutions and virtual asset service providers. North Korean actors have gained unauthorized access to the networks of these victims as part of their fraudulent scheme through a variety of means, including through targeted phishing messages designed to induce victims to download and run software. malicious developed by hackers.
Since 2017, as part of their cyber campaign, North Korean hackers have also executed virtual currency-related heists to generate revenue for the regime, including by hacking virtual asset service providers such as currency exchanges. virtual. A portion of the proceeds from those virtual currency theft and fraud schemes were sent to the virtual currency address 1G3Qj4Y4trA8S64zHFsaD5GtiSwX19qwFv, which Sim and his OTC merchant accomplices used to finance payments for goods for North Korea.
To generate revenue for the regime, North Korea also deploys IT workers to gain illegal jobs 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 workers circumvent security and due diligence controls 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 recruitment platforms. IT workers request payment for their services in virtual currency and then send their earnings to North Korea through, among other methods, FTB representatives like Sim.
A third indictment also unsealed today in the District of Columbia separately charges Wu with operating an unlicensed money transmission business. According to court documents, Wu operated as an OTC trader on a US-based virtual currency exchange, conducting more than 1,500 transactions for US clients without obtaining the necessary licenses.
The FBI Chicago Field Office and the FBI's Virtual Assets Unit (VAU) are investigating the cases.
The charge of conspiring to launder monetary instruments is punishable by a maximum of 20 years in prison. The charge of operating a money transmission business without a license is punishable by a maximum of five years in prison.
Trial Attorney Jessica Peck of the National Cryptocurrency Enforcement Team (NCET) and Department of Justice's Computer Crime and Intellectual Property Section, Assistant United States Attorneys Steven Wasserman and Christopher Tortorice for the District of Columbia, and Trial Attorney Emma Ellenrieder from the Counterintelligence and Export Division of the National Security Division The Control Section is processing the cases. Paralegal specialists Brian Rickers and Angela De Falco and paralegal Jessica McCormick provided valuable assistance. The United States Attorney's Office for the Central District of California, the FBI Los Angeles Field Office, the Criminal Division's Money Laundering and Asset Recovery Section, former Special Agent Chris Janczewski of IRS Criminal Investigation, and former FBI analyst Nick Carlsen also provided significant assistance.
The NCET was created in October 2021 to combat the growing illicit use of cryptocurrencies and digital assets. Under the supervision of the Criminal Division, the NCET conducts and supports investigations into 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, security services, mix and turn and infrastructure. providers. NCET also sets strategic priorities regarding digital asset technologies, identifies areas for increased investigative and prosecution focus, and leads the department's efforts to collaborate with domestic and foreign government agencies, as well as the private sector to investigate and aggressively prosecute crimes involving cryptocurrency and digital assets. .
An accusation is just an accusation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
