US Sanctions North Korean Crypto Operations

The US Treasury Department on Tuesday sanctioned four North Korean entities and one individual for their role in a fundraising scheme that uses cryptocurrency to funnel stolen money and “fraudulently” earned wages abroad. to Pyongyang for its weapons program.

The sanctioned entities include the Pyongyang University of Automation, described as one of the North’s “premier cyber instructional institutions,” and the Office of Technical Reconnaissance, which the Treasury Department says works closely with Lazarus Group, a team of hackers than last year stole 620 million dollars in cryptocurrency.

The 110 Investigation Center, a subsidiary of the Technical Reconnaissance Office that has created “blackouts” in South Korean media and attacked financial and government institutions in Seoul, has also been added to the US sanctions list. .us

The three entities are accused of “malicious cyber activities” to steal funds for use in Pyongyang’s nuclear weapons program, and the South Korean government also simultaneously issued similar sanctions.

“Today’s action continues to highlight the extensive illicit operations of DPRK computer and cyber workers, who finance the regime’s illegal weapons of mass destruction and ballistic missile programs,” Brian Nelson, Treasury Under Secretary, said in a statement. a declaration.

$300,000 annual salaries

However, the list of sanctioning entities also includes the Chinyong Information Technology Cooperation Company, which is accused of managing computer specialists who “fraudulently” work remotely at companies in developed countries and earn high salaries.

“In addition to the theft resulting from cyber intrusions, the DPRK generates significant revenue through the deployment of IT workers who fraudulently obtain employment at companies around the world, including in the technology and virtual currency industries,” the statement said. Treasury, using an acronym for the North Korean regime.

“The DPRK maintains a workforce of thousands of highly-skilled IT workers around the world, located primarily in the PRC and Russia, to generate revenue that contributes to its illegal weapons of mass destruction and ballistic missile programs,” it continued. .

“In some cases, DPRK IT workers can each earn more than $300,000 a year,” he said.

Workers “obfuscate their identities, locations, and nationalities, typically using fake personas, proxy accounts, stolen identities, and forged or forged documentation” to apply for remote jobs at companies in wealthy countries, according to the statement.

They have developed apps in the categories of “business, health and fitness, social media, sports, entertainment and lifestyle,” it added.

The Treasury Statement also says that one person, Kim Sang Man, has been sanctioned for managing “the payment of salaries to the relatives of Chinyong overseas DPRK workers’ delegations”.

‘A sharp break’

Experts told Radio Free Asia that cutting off funding was a key part of weakening the North’s nuclear weapons programme.

The sanctions represent an “important step to degrade North Korea’s ability to engage in illicit cyberattacks to generate revenue” and raise awareness about how cryptocurrency is being misused, said Troy Stangarone, a senior director at the Korea Economic Institute. based in Washington.

“In addition to making it more difficult for North Korea to act, the new designation is a reminder to crypto companies and tech companies that North Korea is working to exploit their systems for its own benefit and the need to take extra precautions,” Stangarone said. .

Meanwhile, Bruce Klinger, a senior fellow at the Heritage Foundation, said the simultaneous sanctions issued by the government of South Korean President Yoon Suk Yeol showed the year-long administration in Seoul was taking a less diplomatic route than his predecessor.

The cooperation marks “a marked break with the Moon Jae-in administration, which sought to reduce international sanctions and law enforcement measures against North Korea, as well as minimize Pyongyang’s human rights violations,” Klinger said.

Edited by Malcolm Foster.