The U.S. government has filed a lawsuit that seeks to grant it control of 280 digital currency wallets it claims were used by North Korean hackers. The hackers allegedly worked with their Chinese counterparts to launder the stolen funds through over-the-counter marketplaces.
In the civil forfeiture filed in the District of Columbia, the Department of Justice (DoJ) revealed that the hackers have been linked to multiple attacks on South Korean exchanges since 2018. However, the 280 wallets are linked to the hackers’ two latest heists on a digital currency exchange and an investment fund.
The DoJ alleged that on July 1, 2019, the hackers attacked an unnamed exchange and stole 11 different digital currencies and tokens, worth over $272,000 in total. The hackers transferred the stolen funds to several exchanges in a chain hopping attempt. This is a tactic of moving between different digital currencies to obfuscate the trail of the stolen funds.
In the second hack, the DoJ claims the hackers took over multiple accounts owned by Algo Capital, an investment firm focusing on the Algorand network. Having acquired the recovery seeds to the wallets, they recreated them and transferred the digital currencies. The DoJ alleges that the firm lost over $2.4 million in the heist which was transferred to 106 different wallets.
The firm, which is now known as Borderless Capital, acknowledged that it had suffered a hack in October last year. It claimed that the accounts were under the control of its CTO Pablo Yabo when they were hacked. It placed the lost funds at $1.9 million, but the DoJ claimed the figure was higher.
“Today’s action publicly exposes the ongoing connections between North Korea’s cyber-hacking program and a Chinese cryptocurrency money laundering network,” remarked Brian Rabbitt, the Acting Assistant Attorney General of the DoJ’s criminal division.
In March 2020, the DoJ charged two Chinese nationals for laundering over $100 million from an exchange hack. This group is still alleged to have played a huge role in laundering the proceeds of the latest hacks.
The DoJ’s latest suit further corroborates a United Nations report that claimed North Korea has relied on cybercrime to fund its illicit missions. Facing choking sanctions from the U.N. and the U.S., the country has allegedly been using “increasingly sophisticated” cyberattacks targeting banks and digital currency exchanges. The U.N. believes that these attacks have yielded over $2 billion in recent years.
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