The US Treasury Department has sanctioned three individuals who helped notorious hacker group Lazarus process the conversion of stolen cryptocurrency to fiat, allegedly for funding illicit weapons of mass destruction (WMD) and ballistic weapons of the Democratic People’s Republic of Korea (DPRK). missile programs.
An earlier report by Chainalysis claimed that the Lazarus Group was responsible for stealing crypto worth around $1.7 billion in 2022.
3 China-based OTC traders face OFAC sanctions
The Treasury Department’s Office of Foreign Assets Control (OFAC) has imposed sanctions on two over-the-counter (OTC) traders Wu Hiuhui, based in the People’s Republic of China, and Cheng Hung Man, based in Hong Kong.
OFAC also sanctioned Sim Hyon Sop, who recently moved to China and worked for Korea Kwangson Banking Corp., an entity previously designated to provide financial services support to two other institutions sanctioned for the proliferation of weapons of mass destruction.
As indicated in a Press release, Wu facilitated the conversion of stolen crypto worth millions of dollars into fiat in 2021 for the Lazarus Group, while Cheng assisted Wu by making payments to companies to receive cryptocurrency. The PR reads:
“Frequently, DPRK players use these OTC merchant networks, including People’s Republic of China (PRC)-based OTC merchants, to transact on their behalf to avoid detection by financial institutions or competent authorities.”
Sim, on the other hand, “coordinated millions of dollars in financial transfers for the DPRK,” with the Treasury Department saying the bank official received funds from IT workers who had fraudulently obtained overseas jobs.
Additionally, Sim ordered Wu and Cheng, along with other OTC traders, to transfer the stolen crypto to shell companies who, in turn, will pay for the goods, including tobacco and communication devices, in fiat on behalf of the DPRK.
As a result of the OFAC sanctions, properties belonging to Wu, Cheng and Sim are blocked, and foreign individuals or institutions that have carried out certain transactions with the designated persons may also risk being sanctioned.
A statement from Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence, said:
“The DPRK’s use of illicit facilitation networks to access the international financial system and generate revenue using virtual currency for the regime’s illegal weapons of mass destruction (WMD) and ballistic missile programs poses a direct threat to security. international.
Lazarus Group controlled by NK Intelligence Bureau
Meanwhile, OFAC’s announcement noted that the Lazarus Group falls under the Reconnaissance General Bureau (RGB) of the DPRK, the country’s main intelligence organization. The hacker group is known for several hacking incidents in the crypto industry.
The Lazarus Group is believed to be behind the biggest crypto hack ever involving the Ronin network, which suffered a loss of $620 million. A report by blockchain security firm Chainalysis in February 2023 said the cybercriminal group stole around $1.7 billion worth of cryptocurrency in 2022.
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