The Department of Foreign Assets Control (OFAC) and South Korea have joined forces to impose sanctions on three individuals who were accused of providing material support to the North Korean-based Lazarus hacking group. The accused individuals allegedly helped convert stolen crypto assets to fiat currency, which was then used to fund North Korea’s development of weapons of mass destruction (WMD) and ballistic missile programs.
According to OFAC’s report, the Lazarus Group is involved in illicit financial and cyber activities that support North Korea’s WMD and ballistic missile programs. The group is believed to have stolen cryptocurrencies worth approximately $1.7 billion through hacking in 2022 alone.
The accused individuals are believed to have worked with North Korean and Chinese over-the-counter (OTC) traders to convert the stolen crypto assets to fiat currency. North Korea reportedly conducted transactions on behalf of the OTC traders to avoid detection by financial institutions or competent authorities.
The Under-Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson, warned that North Korea’s operations to raise funds for WMD and ballistic missile programs directly threaten world security. He noted that North Korea had already launched three intercontinental ballistic missiles in the current year.
The accused individuals are believed to have obtained cryptocurrencies from North Korean citizens who were fraudulently providing IT services in other countries. They allegedly directed OTC traders to transfer funds to front firms, which were then used to purchase items such as tobacco and communication equipment.
According to a report issued by Chainalysis in February this year, North Korea-linked hackers, such as the Lazarus Group, have been the most prolific cryptocurrency hackers in recent years. They stole an estimated $1.7 billion in cryptocurrencies in 2022, through numerous breaches traced to them. North Korea was also a major force behind the DeFi hacking trend, stealing $1.1 billion in DeFi protocol attacks.
The collaboration between OFAC and South Korea is a clear signal of their commitment to combating illicit financial activities and cybercrime that fund North Korea’s WMD and ballistic missile programs. This joint effort is likely to be followed by further actions against individuals and entities that support North Korea’s illicit activities.
