Security & Fraud

Two Chinese Nationals Charged With Laundering $100M In Crypto

Chinese Nationals, money Laundering, Cryptocurrency, virtual currency, exchange, department of Justice, north korea,

Two Chinese nationals were charged by the U.S. Justice Department (DOJ) with laundering over $100 million worth of cryptocurrency that was previously hacked by North Korean fraudsters, the DOJ said on Tuesday (March 3).

According to the two-count indictment filed in federal court in Washington, D.C. and unsealed on Monday (March 2), Tian Yinyin and Li Jiadong allegedly laundered cryptocurrency stolen by North Korean hackers between December 2017 and April 2019. The Chinese men were charged with money laundering conspiracy and operating an unlicensed money transmitting business.

“The hacking of virtual currency exchanges and related money laundering for the benefit of North Korean actors poses a grave threat to the security and integrity of the global financial system,” said U.S. Attorney Timothy J. Shea. “These charges should serve as a reminder that law enforcement, through its partnerships and collaboration, will uncover illegal activity here and abroad, and charge those responsible for unlawful acts and seize illicit funds even when in the form of virtual currency.”

According to the pleadings, North Korean co-conspirators hacked a digital currency exchange and pilfered roughly $250 million worth of cryptocurrency. The money was then washed via eCurrency transactions. The North Korean hackers bypassed several know-your-customer (KYC) provisions using altered photos and fake identifications. A percentage of the stolen money was used to offset the cost of infrastructure used in North Korean hacking campaigns. 

“North Korea continues to attack the growing worldwide ecosystem of virtual currency as a means to bypass the sanctions imposed on it by the United States and the United Nations Security Council. IRS-CI is committed to combating the means and methods used by foreign and domestic adversaries to finance operations and activities that pose a threat to U.S. national security,” said Don Fort, chief, IRS-CI.  “We will continue to push our agency to the forefront of complex cyber investigations and work collaboratively with our law enforcement partners to ensure these nefarious criminals are stopped and that the integrity of the United States financial system is preserved.”

The pleadings also allege that between December 2017 and April 2019, Yinyin and Jiadong laundered more than $100 million worth of virtual currency, most of which came from the hacked virtual currency exchange. The defendants operated in the U.S. but did not register with the Financial Crimes Enforcement Network (FinCEN).

Further, the North Korean co-conspirators are allegedly linked to about $48.5 million worth of stolen virtual currency from a South Korea-based virtual currency exchange in November 2019.  The civil forfeiture complaint identifies 113 virtual currency accounts and addresses that were used by the defendants and unnamed co-conspirators to launder funds.  

The DOJ also said that the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on Yinyin, Liadong, and numerous cryptocurrency addresses.

In January, the U.S. charged Ethereum developer Virgil Griffith with violating North Korean sanctions. He was arrested in November and charged with conspiring to violate the International Emergency Economic Powers Act after traveling to North Korea in April 2019 to attend a cryptocurrency conference. 

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