The US justice department has charged two Chinese nationals with laundering more than $100m worth of virtual currency connected to a North Korean hacking operation.
The indictment is the first of its kind in the US government’s fight to stop Kim Jong Un from raising billions of dollars through cyber attacks that have been used to fund North Korea’s weapons programmes.
Justice department documents released late on Monday said North Korean co-conspirators stole about $250m in 2018 by hacking a cryptocurrency exchange. Those funds were then laundered via hundreds of transactions meant to disguise the origins of the virtual currencies.
Between the end of 2017 and April 2019, Chinese nationals Tian Yinyin and Li Jiadong took part in the scheme, laundering more than $100m using 113 virtual currency accounts and addresses, according to the justice department.
“Today, we are publicly exposing a criminal network’s valuable support to North Korea’s cyber heist programme and seizing the fruits of its crimes,” John C Demers, assistant attorney-general at the justice department’s National Security Division, said.
The US Treasury department also sanctioned the Chinese nationals for assisting Lazarus Group, a North Korean state-sponsored cyber group that has already been sanctioned by the US.
The individuals are not in US custody. Lazarus Group was linked to the hacking of India’s Kudankulam nuclear power plant in October last year
In recent years, Kim Jong Un’s regime has been accused of deploying an army of thousands of hackers that bring in hundreds of millions of dollars annually through illicit cyber-based activities.
The revenues derived by the cyber operations are believed to provide core funding for developing weapons in the isolated Stalinist state.
The United Nations said last year that North Korean agents had stolen about $2bn from banks and cryptocurrency exchanges, some of which is believed to fund its nuclear weapons programme.
The hacking of cryptocurrency exchanges has presented a new degree of difficulty for authorities around the world because the exchanges are lightly regulated in some jurisdictions and transactions in digital assets are often anonymous.
Brian A Benczkowski, assistant attorney-general, noted in a statement that the actions highlighted the justice department’s ability to “pierce the veil of anonymity provided by cryptocurrencies to hold criminals accountable”.
The documents from the justice department reveal a high degree of sophistication in the efforts to launder stolen funds. Prepaid Apple iTunes gift cards and several Chinese bank accounts were used by the Chinese nationals to launder the funds, the documents showed.
Mr Tian transferred about $1.4m worth of Bitcoin into prepaid Apple gift cards, according to the treasury department. About $34m was transferred to Chinese banks.
A number of Chinese financial institutions have been targeted by US authorities for their alleged connections to North Korean business activities. Bank of Dandong was hit with US sanctions in 2017 for its alleged business with North Korea.