North Korea Launders Billions in Stolen Crypto Through OTC Brokers
North Korea employs a sophisticated scheme to launder stolen cryptocurrency, primarily through over-the-counter (OTC) brokers. Key points include:
- The country has hacked companies for over $5 billion since 2017.
- Major exchanges, like Binance and Coinbase, implement KYC checks, making it difficult for North Korea to off-ramp funds directly.
- North Korea relies on global exchanges lacking compliance controls and uses Chinese money laundering networks.
- It converts crypto into fiat currencies such as the Chinese renminbi or U.S. dollar.
- Challenges arise due to the volume of funds; an average of $51 million per month must be off-ramped.
- Stolen ETH from the Bybit hack is being converted to Bitcoin and processed through mixers like Wasabi and CryptoMixer.
- These mixers typically handle up to $10 million daily, leading to potential bottlenecks in laundering operations.
After off-ramping, tracking the funds becomes challenging for blockchain analysis firms, although government agencies like the FBI and IRS-CI continue monitoring. In past cases, these agencies have successfully recovered stolen assets, demonstrating ongoing efforts to combat money laundering tied to North Korea.
U.S. cooperation with Japan and South Korea enhances surveillance of Chinese shell companies used for laundering. Previous subpoenas issued to Chinese banks indicate the complexities involved in prosecuting cross-border financial crimes.