Seoul considers new penalties as North Korean crypto theft escalates

Second Vice Foreign Minister Kim Ji-na announced on November 6 that South Korea is considering sanctions on North Korea over rampant crypto crime, and that cooperating with the U.S. is critical. She emphasized that most of these funds could find their way to North Korea’s nuclear programs while threatening the world’s digital economy.

The Second Vice Foreign Minister stressed that her country has been making efforts to combat fraudulent activities, and in that context, it is considering sanctions as a measure whenever necessary. Her remarks came after the U.S. imposed fresh sanctions on two North Korean entities and eight individuals suspected of laundering stolen funds, most of it in crypto.  

However, these sanctions do not appear to faze North Korea’s hackers yet. They are reportedly fast, decentralized, and invisible, making them a difficult target. Under Secretary of the Treasury for Terrorism and Financial Intelligence John Hurley said North Korean state-backed hackers steal and launder crypto assets to fund the regime’s nuclear programs. Meanwhile, the message from Washington to Pyongyang is clear — it urges the regime to stop treating blockchain like a bomb factory.

Kim says South Korea is following the United States’ lead

Second Vice Foreign Minister Kim disclosed that her country is awaiting clarification from the U.S. side regarding internal coordination. She added that Washington is currently working on reviewing and adjusting the wording of a joint fact sheet regarding the outcome of last week’s meeting between President Donald Trump and President Lee Jae Myung.

The U.S. Treasury Department recently asserted that the North Korean government relies on several illegal activities, including cybercrime, and explicitly tasks its hackers to raise funds using these illicit means. It added that North Korea’s cybercriminals have so far stolen $3 billion, mainly in crypto, using social engineering and advanced malware. 

“By generating revenue for Pyongyang’s weapons development, these actors directly threaten U.S. and global security. Treasury will continue to pursue the facilitators and enablers behind these schemes to cut off the DPRK’s illicit revenue streams.” 

–John Hurley, Under Secretary of the Treasury for Terrorism and Financial Intelligence 

However, the U.S. Treasury Department pointed out that nabbing these North Korean malicious actors has become increasingly complex because they are scattered around the world under hidden identities. They also collaborate with non-North Korean freelancers on projects originally commissioned by the North Korean government, then split the income. 

The Department further stated that all properties or dealings with sanctioned individuals or entities are blocked and must be reported to OFAC (the Department of the Treasury’s Office of Foreign Assets Control). Meanwhile, North Korean President Kim Jong Un believes these measures are hostile.

Ang says South Korea has considered sanctioning North Korea before

Angela Ang, Head of Policy and Strategic Partnerships for Asia Pacific at TRM Labs, stated that this would not be the first time South Korea has considered sanctioning North Korea independently. She added that OFAC sanctions have far-reaching implications, as they cut off access to the global financial system, and South Korea’s sanctions would be seen as a reinforcement of these restrictions.  

Ryan Yoon, a Senior Analyst at Tiger Research, also acknowledged a high possibility of South Korea imposing more sanctions on North Korea. However, the impact may not be as significant. Yoon pointed out that the escalation between North and South Korea follows North Korea’s nuclear testing in 2016. Large-scale exchanges between the two countries were severed entirely during that time, and small-scale sanctions have continued to be imposed.

Cryptopolitan previously reported that representative Lee Yang-soo of the ruling People Power Party has called on South Korea’s financial authorities to closely monitor crypto exchanges in the region. He added that, above all, they should accurately identify the true nature of these illicit actions and devise countermeasures.

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