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North Korean Bank Official Faces Federal Indictments on Crypto Laundering Charges

Earlier on Monday, April 24, a Washington, D.C., district court disclosed two federal indictments while charging a North Korean bank official for his alleged involvement in crypto laundering conspiracies.

As per the first indictment, Sim Hyon Sop (Sim), a representative of the North Korean Foreign Trade Bank (FTB), has been allegedly laundering funds stolen from crypto service providers and later transferring them to US Dollars to purchase goods along with a group of OTC crypto traders, notes the filing.

As per the current sanctions on North Korea by the US and the UN, these actions are in violation of it. These indictments present a broader pattern of North Korean users leveraging virtual private networks (VPNs) as well as virtual digital assets to redirect revenues to North Korea.

In recent years, operatives working under the direct assistance of North Korea’s state administration have been behind several crypto-focused hacks. Last year in 2022, such operatives made a massive $1.7 billion through crypto hacks, as per the US Treasury Department.

As part of the second indictment, Sim has been charged with conspiring with a group of North Korean IT workers to launder nearly $12 million through illegally-earned wages from the IT development work happening in the United States.

To seek employment at blockchain development firms, these workers assumed fake identities during the period between 2021 and March 2023. These IT workers requested that their salaries be paid in digital assets, especially stablecoins such as USD Tether and USD Coin. They received these funds through US-based crypto exchanges, as per a release from the US Department of Justice (DoJ).

These IT workers allegedly worked with Sim to launder the earnings as well as redirect them to North Korea. The indictment alleges that the sanctioned state used these funds to “generate revenue for North Korea’s ballistic missile and WMD programs”.

As per the DOJ release, the FBI continues to investigate the crypto laundering case while the money laundering charges are punishable by a maximum of 20 years in prison. However, the North Korean bank official and others are unlikely to face any trial since these players were largely based in China or Hond Kong when the crime happened. Also, the US doesn’t have any extradition treaty with China. In the release, Kenneth A. Polite, Jr., Assistant Attorney General in the DOJ’s criminal division, said:

“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. 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.”

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North Korean Bank Official Faces Federal Indictments on Crypto Laundering Charges

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