The North Korean Foreign Trade Bank representative, Sim Hyon Sop, has been charged in two separate crypto laundering conspiracies designed to generate revenue for the Democratic People’s Republic of Korea (DPRK) through the use of cryptocurrency. The indictments, announced by U.S. Attorney Matthew M. Graves, reveal North Korea’s continued efforts to circumvent U.S. sanctions by exploiting virtual assets and the technological features of cryptocurrency. One indictment charges Sim and three over-the-counter traders with laundering stolen cryptocurrency and purchasing goods for North Korea through Hong Kong-based front companies to avoid sanctions. The second indictment alleges a conspiracy to launder proceeds of illegal IT development work. These charges highlight the importance of following the money and holding those accountable who aid in funding the corrupt regime.
In recent news, a North Korean Foreign Trade Bank representative has been charged for his involvement in two separate cryptocurrency laundering conspiracies. These conspiracies were designed to generate revenue for the Democratic People’s Republic of Korea (DPRK) by using cryptocurrency. Along with this representative, several co-conspirators have also been indicted in connection with these illegal activities.
Indictment 1 – Laundering Stolen Cryptocurrency
The first indictment involves Sim Hyon Sop, a North Korean national, who is accused of conspiring with three over-the-counter (OTC) traders to launder stolen cryptocurrency. These OTC traders include Wu HuiHui, a Chinese national residing in Jinan, Shandong, China, Cheng Hung Man, a Hong Kong British National (Overseas) living in Hong Kong, and an unknown individual using the online moniker “live:jammychen0150.” The conspirators allegedly used stolen cryptocurrency to purchase goods through Hong Kong-based front companies for the benefit of North Korea. The payments were made in U.S. dollars and were directed by Sim, who used Chen as a intermediary to facilitate these transactions and avoid U.S. sanctions against North Korea.
Indictment 2 – Laundering Proceeds of Illegal IT Development
The second indictment involves a conspiracy between Sim and various North Korean IT workers to launder proceeds from illegal IT development work. According to court documents, these IT workers obtained employment at U.S. crypto companies using fake identities and then funneled their illicit gains through Sim for the benefit of the North Korean regime. This activity directly contravened sanctions imposed against North Korea by the Department of Treasury’s Office of Foreign Assets Control (OFAC) and the United Nations.
Virtual Currency-Related Thefts by North Korean Hackers
Since 2017, North Korean hackers have been executing virtual currency-related thefts to generate revenue for the regime. They have specifically targeted virtual asset service providers, such as virtual currency exchanges, to execute these thefts. A portion of the proceeds from these schemes was funneled to a virtual currency address, which Sim and his OTC trader co-conspirators used to fund payments for goods for North Korea.
Indictment 3 – Unlicensed Money Transmitting Business
In a separate indictment, Wu, one of the OTC traders involved in the first conspiracy, is charged with operating an unlicensed money transmitting business. Wu conducted over 1,500 trades for U.S. customers, totaling over $800,000, without the necessary license to do so.
Sanctions Imposed by the Department of Treasury
In addition to the indictments, the Department of Treasury has also imposed sanctions on Sim, Wu, and Cheng. These sanctions are concurrent with the legal actions taken against them and serve to further restrict their involvement in illicit financial activities.
Penalties for Charges
Conspiring to launder monetary instruments, as alleged in the first and second indictments, is a serious offense that carries a maximum penalty of 20 years in prison. Operating an unlicensed money transmitting business, as charged in the third indictment, is punishable by a maximum of 5 years in prison.
Investigation and Prosecution
The investigation into these cryptocurrency laundering conspiracies was conducted by the FBI’s Chicago Field Office. The case is being prosecuted by the Justice Department’s National Cryptocurrency Enforcement Team (NCET), with assistance from the U.S. Attorney’s Office for the District of Columbia and the National Security Division’s Counterintelligence and Export Control Section. Additionally, significant assistance was provided by the U.S. Attorney’s Office for the Central District of California, the FBI’s Los Angeles Field Office, former IRS-Criminal Investigation Special Agent Chris Janczewski, and former FBI analyst Nick Carlsen.
Disclaimer of Allegations
As with any criminal case, it is important to remember that the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. These indictments serve as allegations against the defendants, and it will be up to the justice system to determine their guilt or innocence.
The charging of a North Korean Foreign Trade Bank representative and his co-conspirators in two separate cryptocurrency laundering conspiracies highlights the continued efforts of North Korea to evade U.S. sanctions. These charges demonstrate the commitment of law enforcement to follow the money and hold accountable those who aid in funding corrupt regimes. The cooperation between agencies and the imposition of sanctions further underscores the seriousness with which these illicit activities are being addressed.