North Korea’s Crypto Laundering: How IT Workers Fund the Regime

North Korean IT workers are running a massive crypto laundering operation. They’re infiltrating companies worldwide to earn cryptocurrency. These earnings fund North Korea’s weapons programs.

The scheme works in three stages. First, workers get hired at global IT firms. They use fake identities and VPNs to hide their location. AI tools help them pass video interviews. Once hired, they request payment in stablecoins. One worker received $5,000 monthly payments for over a year.

After getting paid, workers transfer funds through complex routes. They use decentralized exchanges and bridge protocols. This breaks the connection between source and destination. Chain-hopping and token swapping make tracing difficult. The money then goes to middlemen.

These facilitators consolidate funds from multiple workers. Kim Sang Man represents Chinyong, a sanctioned North Korean company. Sim Hyon Sop works for Korea Kwangson Banking Corp. Both receive millions in cryptocurrency.

These middlemen open accounts at mainstream exchanges. Some use fake Russian documents. Others operate from the UAE with real identities. Lu Huaying, a Chinese OTC trader, was sanctioned in December 2024 for helping launder funds.

Converting Crypto to Cash: The Last-Mile Crypto Laundering Journey

The final step involves converting crypto to fiat currency. Middlemen use their exchange accounts or work with OTC traders. The DOJ seized funds in recent enforcement actions. Blockchain analytics platforms like Chainalysis helped track these networks.

Companies can spot potential North Korean workers. Red flags include mismatched IP locations and manipulated documents. Workers often avoid video calls or show below-market rates for advanced skills. They prefer stablecoin payments split across multiple wallets.

OFAC and South Korean authorities continue sanctioning these networks. The FBI issued advisories for IT companies. These actions aim to cut funding to North Korea’s weapons programs.

The blockchain leaves permanent records. This helps law enforcement disrupt these operations. But the networks keep adapting. Companies need strong verification processes to avoid hiring these workers.