The North Korean hacking group laundered money through Chinese over-the-counter (OTC) cryptocurrency traders
The United States Department of Justice (DoJ) has filed a civil forfeiture complaint against North Korean hackers yesterday, charging them with the hack of two virtual currency exchanges. The hackers have been accused of stealing millions of dollars’ worth of cryptocurrency and laundering the money through Chinese over-the-counter (OTC) cryptocurrency traders. The August 27 statement further claimed that the hackers used over 280 different digital assets accounts.
The complaint refers to similar civil and criminal actions, taken in March this year against two Chinese nationals charged with theft of $250 million in cryptocurrency. The DoJ statement connects the ordeal to the present case noting that the North Korean parties facilitated the theft through other crypto exchange hacks.
Acting Assistant Attorney General, Brian C. Rabbitt, of the Justice Department’s Criminal Division explained that the hacking scheme from North Korea matched the crypto-based money laundering ring in China and formed a drawn-out web of connected activity.
“Today’s action publicly exposes the ongoing connections between North Korea’s cyber-hacking program and a Chinese cryptocurrency money laundering network,” Rabbitt said. “This case underscores the department’s ongoing commitment to counter the threat presented by North Korean cyber hackers by exposing their criminal networks and tracing and seizing their ill-gotten gains,” he added.
The action was based on a complaint made in 2019 that reported a virtual currency exchange was hacked by an actor tied to North Korea. Hackers were accused of stealing $272,000 worth of cryptocurrencies and tokens, including Proton Tokens, PlayGame tokens and IHT Real Estate Protocol tokens.
The DoJ report outlines how the accused laundered the stolen funds and explains that the actors converted the cryptocurrency into BTC, Tether, or other forms of cryptocurrency in order to obfuscate the transaction path through a process known as chain hopping.
The report further refers to another hacking incident in September 2019 where the North Korean hackers gained access to the company’s virtual currency wallets and stole nearly $2.5 million. These funds were laundered through over 100 accounts at another virtual currency exchange.
Don Fort, chief of the IRS’ criminal investigatory branch, IRS-CI said that the accused used highly sophisticated laundering techniques and added that the efforts of the agency led to trace the stolen funds directly back to North Korean accounts.
Explaining the threats against institutions in the US, Special Agent, Steven Cagen said “We are committed to safeguarding the interest of the United States against the criminal elements in North Korea to protect the integrity of the cyber financial system”.
Written by: Harshini Nag