US charges 2 Chinese nationals with laundering over USD 100 mn in cryptocurrency

The US has charged two Chinese nationals with laundering over USD 100 million worth of cryptocurrency from an exchange of the virtual currency which was hacked.

The funds were stolen by North Korean actors in 2018.

In the two-count indictment unsealed Monday in the District of Columbia, Tian Yinyin and Li Jiadong were charged with money laundering conspiracy and operating an unlicensed money transmitting business, the Department of Justice said.

"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 US Attorney Timothy J Shea of the District of Columbia.

"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 combatting the means and methods used by foreign and domestic adversaries to finance operations and activities that pose a threat to US national security," said IRS-CI Chief Don Fort.

According to the pleadings, in 2018, North Korean co-conspirators hacked into a virtual currency exchange and stole nearly USD 250 million worth of virtual currency. The funds were then laundered through hundreds of automated cryptocurrency transactions aimed at preventing law enforcement from tracing the funds.

The North Korean co-conspirators circumvented multiple virtual currency exchanges' know-your-customer controls by submitting doctored photographs and falsified identification documentation. A portion of the laundered funds was used to pay for infrastructure used in North Korean hacking campaigns against the financial industry, the complaint alleges.

The civil forfeiture complaint specifically names 113 virtual currency accounts and addresses that were used by the defendants and unnamed co-conspirators to launder funds. The forfeiture complaint seeks to recover the funds, a portion of which has already been seized.

The pleadings further allege that between December 2017 and April 2019, Tian and Li laundered over USD 100 million worth of virtual currency, which primarily came from virtual currency exchange hacks. They operated through independent as well as linked accounts and provided virtual currency transmission services for a fee for customers.

The pleadings further allege that the North Korean co-conspirators are tied to the theft of approximately USD 48.5 million worth of virtual currency from a South Korea-based virtual currency exchange in November 2019.