The U.S. Treasury Department has imposed sanctions on two individuals and an entity accused of laundering cryptocurrencies for North Korea, as part of efforts to counter the country’s illicit financial activities.
The Treasury’s Office of Foreign Assets Control (OFAC) identified Lu Huaying and Zhang Jian, both Chinese nationals, as key figures in the laundering network. They are alleged to have facilitated money laundering on behalf of Sim Hyon Sop, a sanctioned banking representative for the Democratic People’s Republic of Korea (DPRK).
The pair reportedly operated through a front company in the United Arab Emirates named Green Alpine Trading, which has now been designated as a sanctioned entity. The company is accused of serving as a central hub in the network.
Support for North Korea’s Weapon Programs
The U.S. Treasury highlighted the role of the DPRK in leveraging its agents and proxies to conduct illicit financial activities, including cryptocurrency theft, fraudulent IT work, and money laundering. The funds, according to the Treasury, support North Korea’s weapons of mass destruction (WMD) and ballistic missile programs.
North Korean hacker groups, including the infamous Lazarus Group, have been linked to some of the largest cryptocurrency heists in history. These include the $600 million hack of the Ronin Ethereum sidechain in 2022.
Deceptive Tactics by North Korean Hackers
North Korean hackers reportedly employ tactics such as impersonating recruiters or executives from legitimate cryptocurrency firms to deceive targets. For example, blockchain security firm SlowMist has revealed that a Lazarus Group hacker once posed as an executive from the Chinese blockchain firm Fenbushi Capital, luring victims on LinkedIn into clicking malicious links.
Crypto’s Role in Funding DPRK
Reports suggest that 50% of North Korea’s foreign currency earnings come from cryptocurrency theft, a significant portion of which is directed toward developing WMDs. In March, South Korea’s Yonhap News Agency cited the UN Security Council, affirming that crypto theft is a crucial part of DPRK’s strategy to bypass international sanctions.
The latest U.S. sanctions aim to disrupt this network and send a clear message about the consequences of engaging in financial activities that support North Korea’s unlawful objectives.
