The US Department of Foreign Asset Control (OFAC) has partnered with South Korea to impose sanctions on three individuals accused of providing material support to the North Korea-based Lazarus hacking group.
The agency alleges that the trio helped convert stolen cryptocurrency to fiat currency, thereby supporting the group’s illicit financing and cyber activities. The Lazarus Group has been linked to North Korea’s development of weapons of mass destruction (WMD) and ballistic missile programs, according to OFAC’s report.
Illicit Activities Pose Threat to International Security
Brian E. Nelson, the Under Secretary of the Treasury for Terrorism and Financial Intelligence, has warned that North Korea’s illicit activities, including the use of virtual currency to generate revenue for its WMD and ballistic missile programs, pose a direct threat to international security. He noted that the country has already launched three intercontinental ballistic missiles this year.
OFAC has alleged that the stolen cryptocurrencies were converted to fiat currency through networks of North Korean and Chinese over-the-counter traders (OTC) that North Korea often uses to avoid detection by financial institutions or competent authorities.
The agency has imposed sanctions on three individuals linked to the Lazarus Group. Wu Huihui was sanctioned for providing material assistance to the group, while Cheng Hung Man was added to the sanctions list for aiding Wu. Sim Hyon Sop, who OFAC said acted on behalf of Korea.
OFAC imposes comprehensive sanctions on the group
Kwangson Banking Corp., an entity previously connected with providing financial services to entities proliferating WMD, was also sanctioned. According to OFAC, Sim received cryptocurrency from North Korean nationals fraudulently performing IT work abroad.
In turn, he told traders Wu and Cheng to send funds to front companies that used them for goods including tobacco and communication devices. OFAC cited public records, claiming that North Korean actors stole nearly $1.7 billion in virtual currency through hacking in 2022, accounting for nearly half of the $3.8 billion stolen last year, according to Chainalysis.
Impact of Sanctions
OFAC has blocked all property and interests belonging to Sim, Wu, and Cheng, and any person or financial institution that engages in certain transactions or knowingly provides “significant financial services” to them could also face OFAC’s sanctions.
The US and South Korea’s coordinated efforts to impose sanctions on these individuals demonstrate their commitment to tackling North Korea’s illicit activities and safeguarding international security.