The U.S. Justice Department filed a civil forfeiture complaint against North Korean crypto hackers in a bid to recover millions of dollars’ worth of cryptocurrency stolen and laundered through Chinese over-the-counter (OTC) cryptocurrency traders.
This complaint follows related criminal and civil actions announced in March this year pertaining to the theft of $250 million in cryptocurrency through other exchange hacks by North Korean actors in 2018.
As per the complaint filed recently, in July 2019, a virtual currency exchange was hacked by North Korean actors. Over $272,000 worth of alternative cryptocurrencies and tokens, including Proton Tokens, PlayGame tokens, and IHT Real Estate Protocol tokens were reportedly stolen.
The actors converted the cryptocurrency into BTC, Tether and other forms of cryptocurrency – a process known as “chain hopping”. Also, in September 2019, a US-based company was hacked. The hacker stole nearly $2.5 million and laundered it through over 100 accounts at another virtual currency exchange.
The complaint filed in August seeks a judgment declaring that the property be forfeited to the United States government in order to return funds to the hacked exchanges or users.
The funds from the two-consecutive years’ hacks were all allegedly laundered by the same group of Chinese OTC actors. The infrastructure and communication accounts used to further the intrusions and fund transfers were also tied to North Korea.
“The Internal Revenue Service Criminal Investigation (IRS-CI) was able to trace stolen funds directly back to North Korean actors,” said Don Fort, Chief of IRS Criminal Investigation (IRS-CI). Furthermore, “IRS-CI will collaborate with the law to combat operations that threaten the United States financial system and national security.”
Special Agent in Charge Emmerson Buie Jr. of the FBI’s Chicago Field Office said:
International cryptocurrency laundering schemes undermine the integrity of our financial systems at a global level, and we will use every tool in our arsenal to investigate and disrupt these crimes.
In 2019, a panel of experts established by the United Nations Security Council to investigate compliance with sanctions against North Korea discovered that the North Korean government has “used cyberspace to launch increasingly sophisticated attacks to steal funds from financial institutions and cryptocurrency exchanges to generate income.”