The U.S. Department of Justice has now filed a civil forfeiture complaint seeking to permanently claim more than $7.74 million. These significant funds were previously frozen and subsequently seized from North Koreans who had allegedly obtained them through an illicit IT worker scheme. This seized money is directly connected to Sim Hyon Sop, a North Korean Foreign Trade Bank representative who was indicted in April 2023. He allegedly conspired with other IT workers from North Korea to launder money obtained through their various illegal employment at U.S. companies. The Justice Department’s National Security Division said North Korea has long exploited global remote IT contracting and also cryptocurrency ecosystems to evade sanctions.
Court documents have revealed how the participants are able to send their illicit cryptocurrency earnings back to North Korea using various methods.
They often set up their accounts on cryptocurrency platforms with completely fake identities and then move funds in a series of smaller transactions. They also frequently convert funds to other forms of cryptocurrency, purchase NFTs, and use various U.S.-based accounts to legitimize all their activity. Once the funds are successfully commingled and laundered, they are then sent to North Korea through either Sim Hyon Sop or Kim Sang Man. Kim Sang Man is another North Korean official who runs an IT company known as Chinyong, operating from North Korea’s Ministry of Defense.
The cryptocurrency analysis firm TRM Labs successfully tracked various digital wallets that are associated with the North Korean official Sim Hyon Sop.
Their extensive and detailed investigation found that his wallets had received more than $24 million in illicit funds between the years 2021 and 2023. His accounts on various unnamed cryptocurrency platforms were reportedly opened by him using forged Russian identity documents for this money laundering purpose. TRM Labs concluded that both Sim and Kim functioned as central clearinghouses for all of the illicit proceeds generated from these schemes. A substantial portion of Sim’s wallet balance was later transferred to an over-the-counter trader based in the United Arab Emirates.
The Justice Department has explained that this complaint is part of its larger “DPRK RevGen: Domestic Enabler Initiative,” which was launched last year. This ongoing government initiative is specifically designed to disrupt the entire financial network that was built to support this North Korean IT worker scheme. The lucrative scheme has successfully brought in millions of dollars for the North Korean regime, often with help from unwitting American enablers. The Federal Bureau of Investigation stated its investigations have uncovered massive campaigns by North Korea to defraud many U.S. businesses by obtaining employment. These employment scammers continue to evolve in the advanced tools they use, with OpenAI recently banning suspicious accounts showing similar behavior.
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