3 - 6 minute read
The United States Treasury Department has identified Chinese and Hong Kong-based over-the-counter (OTC) cryptocurrency traders who allegedly helped North Korea’s Lazarus Group in converting stolen crypto into fiat currency. In addition, a China-based banker was sanctioned for coordinating some of the illicit cash flow. Wu Huihui, a Chinese national, was sanctioned for converting millions of dollars’ worth of crypto into fiat currency for North Korean “cyber actors” in multiple transactions in 2021. According to the Treasury Department, North Korean hackers frequently use OTC traders to conduct transactions on their behalf to avoid detection by financial institutions or competent authorities. Cheng Hung Man, a Hong Kong-based British national, was sanctioned for providing material support to Wu, while Sim Hyon Sop, a North Korean living in China and a deputy representative of the Korea Kwangson Banking Corp, was sanctioned for allegedly coordinating financial transfers from traders, including Wu and Cheng, that eventually ended up supporting North Korea’s weapons of mass destruction and ballistic missile programs.
The United States government has been ramping up its efforts to crack down on illicit cryptocurrency activities. This latest action against Chinese and Hong Kong-based crypto traders who assisted North Korea in converting stolen crypto into fiat currency is just the latest example. The government has been increasingly concerned about the use of cryptocurrencies to fund illegal activities, including terrorism, money laundering, and drug trafficking.
The Chinese government severely restricts operations with cryptocurrency, but OTC transactions are still possible. The sanctions imposed on Wu and Cheng are a direct result of their involvement with the North Korean hackers. The US government has made it clear that it will not tolerate any activity that supports North Korea’s weapons program.
According to the Treasury Department’s statement, “The North Korean regime continues to use cyberattacks to steal and launder funds in order to support its illicit weapons of mass destruction and ballistic missile programs.” The government is taking this threat seriously and is taking action to prevent North Korea from obtaining the funds it needs to continue its nuclear program.
The US government’s action against these Chinese and Hong Kong-based crypto traders has implications for the cryptocurrency market. Traders should be aware that the US government is closely monitoring activities in the crypto market and will take action against any individual or group that is involved in illegal activities. Traders should also be aware that the risk of sanctions is not limited to those who are directly involved in illegal activities. Any individual or group that provides material support to those involved in illegal activities can also be subject to sanctions.
The U.S. Department of the Treasury's #OFAC has just issued more sanctions targeting North Korea's #crypto-enabled sanctions evasion activity. 🇰🇵— Jay "TechAdept" Laurence (@TechAdeptRDD) April 24, 2023
Today OFAC sanctioned Wu HuiHui and Cheng Hung Man, China and Hong Kong-based OTC #cryptocurrency brokers…https://t.co/bLoqlVyMYo
The Bottom Line
The US government’s action against Chinese and Hong Kong-based crypto traders who assisted North Korea in converting stolen crypto into fiat currency is a clear indication of its commitment to cracking down on illicit cryptocurrency activities. Traders should be aware of the risks involved in the crypto market and should take steps to ensure that they are not involved in any illegal activities. The Bottom Line is that the US government is taking a strong stance against illicit cryptocurrency activities, and traders should take this as a warning to stay on the right side of the law.