DOJ Seizes $7.7M in Crypto Tied to North Korea
DOJ Seizes $7.7M in Crypto Linked to North Korean IT Workers
The US Department of Justice (DOJ) has initiated legal action to confiscate $7.74 million in cryptocurrency allegedly obtained by North Korean IT workers. These workers reportedly used fake identities and worked remotely for blockchain firms as contractors.
This action follows an April 2023 indictment against Sim Hyon Sop, a China-based banker accused of aiding North Korean IT workers in money laundering. The DOJ's June 5th statement detailed the seizure of various cryptocurrencies, including stablecoins, Bitcoin (BTC), non-fungible tokens (NFTs), and Ethereum Name Service (ENS) domains. These assets were held across multiple self-custody wallets and Binance accounts.
Laundering Techniques and Sanctions Evasion
The DOJ's civil forfeiture complaint, filed in a Washington, DC federal court, alleges that the North Korean IT workers employed sophisticated laundering techniques. These included "chain hopping" and token swaps to NFTs, aimed at obscuring the funds' origins. Payments, often made in stablecoins like USDC and USDT, were allegedly routed back to the North Korean government through Sim Hyon Sop and Kim Sang Man, another North Korean sanctioned by the Office of Foreign Assets Control (OFAC) for money laundering.
Matthew Galeotti, head of the DOJ’s criminal division, emphasized the North Korean government's attempts to exploit the cryptocurrency ecosystem to fund illicit activities. The DOJ intends to utilize all legal means to protect the cryptocurrency ecosystem and prevent North Korea from profiting from these sanctions violations.
Expanding North Korean Crypto Operations
Reports indicate that North Korea is aggressively expanding its infiltration of the crypto industry. Google's Threat Intelligence Group reported in April that North Korea is increasingly targeting blockchain firms outside the US, particularly in Europe, after facing increased scrutiny. Blockchain investigator ZachXBT also uncovered a network of North Korean developers allegedly earning up to $500,000 a month working for established crypto projects.
In 2022, a joint advisory from the DOJ, Department of State, and Treasury warned about the influx of North Korean workers into freelance tech roles, especially within the cryptocurrency sector. This highlights the ongoing threat posed by North Korea's sophisticated cyber operations and the need for robust security measures within the blockchain industry.
Codeum's Role in Blockchain Security
Codeum, a blockchain security and development platform, provides crucial services to mitigate risks such as those highlighted in this case. Our services include smart contract audits, KYC verification, custom smart contract and DApp development, tokenomics and security consultation, and partnerships with launchpads and crypto agencies. By ensuring the security and integrity of blockchain projects, Codeum helps protect the industry from exploitation and strengthens its overall resilience.