In a new report by the Multilateral Sanctions Monitoring Team (MSMT), a mechanism to monitor and report UN sanctions violations, cryptocurrency is earning the Democratic People’s Republic of Korea (DPRK) billions of dollars worth of foreign currency every year.
According to the report, it’s one of North Korea’s most stable ways to acquire foreign currency since at least 2022, and is helping Russia acquire DPRK manufactured munitions and weapons.
This sanctions evasion and use of crypto to launder and abstract monetary movements appears to be a direct contributor to Russia’s ability to fight its war against Ukraine.
While early in the Russo-Ukrainian War, crypto was heralded as a way for hundreds of millions of dollars to be donated to the Ukrainian war effort.
However, according to the MSMT, it’s proven to be far more useful for the Putin regime and the DPRK, with “DPRK officials… found to have used a… stablecoin for procurement-related transactions, including the sale and transfer of military equipment and raw materials such as copper, which is used in munitions production.”
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The report specifically highlights tether’s (USDT) usefulness for the Kim regime, stating that “since at least 2023, the DPRK’s 221 General Bureau… and other DPRK officials have attempted to expand the DPRK’s use of cryptocurrency beyond cybercrime to include the use of cryptocurrency as a form of exchange and payment for goods and services.
“This includes using USDT in procurement-related transactions.”
The only bigger contributor of foreign currency to the DPRK is the direct sales of munitions and weapons to Russia, which the Putin regime is in turn utilizing on the frontlines in Ukraine.
At this point, it’s impossible to argue that the DPRK doesn’t rely heavily on cryptocurrencies, not only as an intricate part of the overall economy, but a lifeline for the Kim regime.
MSMT provides a useful step-by-step rundown of what DPRK hackers and IT workers are doing to acquire US dollars, Chinese Yuan, and Russian rubles:
The process for laundering crypto involves ether (ETH), bitcoin (BTC), DAI, USDT, and the Justin Sun-created coins TRON (TRX) and USDD.
Other coins, tokens, and NFTs have undoubtedly been hacked, stolen, and utilized by DPRK operatives, but they don’t play as important a role.
China also has a role to play in the rise of cryptocurrency and Kim’s booming economy. Specifically, phony IT workers throughout the Chinese mainland are planted, acquire Chinese bank accounts, and then get a UnionPay debit/credit card so they can transact in yuan.
Protos reached out to UnionPay for comment, but hasn’t received a response.
What’s clear is that Kim and his teams of spies, hackers, and weapons manufacturers rely on illicit revenue from crypto to produce enough weapons every year to meet the demand of the Russian military and pour more money into the coffers of the Kims and the Worker’s Party of Korea.
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While simultaneously discussing how “the DPRK is able to move funds at lightning speed, making recovery difficult after a heist occurs,” the report devotes a significant portion to how centralized cryptocurrencies and exchanges can be forced to work with authorities and what governments and citizens need to do to protect themselves from phishing attacks and hacks.
The report states, “blockchain technology, in many circumstances, allows cryptocurrency assets to be frozen on the blockchain by the issuer or exchange, and once frozen, some law enforcement entities can seize those assets… A platform’s reputation for responsiveness to law enforcement may deter DPRK actors from using it.”
This may present an opportunity for law enforcement, but still presents obstacles in regard to decentralized exchanges and cryptocurrencies, uncooperative centralized entities like USDD, and mixers like Wasabi Wallet, CryptoMixer, Tornado Cash, JoinMarket, and Railgun.
The MSMT report establishes protocols to abide by and warning signs, but there appears to be little-to-no identifiable way to stop the DPRK from continuing to discover multimillion- and multibillion-dollar exploits within the crypto industry.
Some concepts mentioned in the report that may worry investors and advocates include, but are not limited to:
Not only has the DPRK been able to infiltrate multiple crypto exchanges and companies, it has placed thousands of IT workers in roles both remote and in-person in numerous industries, particularly throughout China.
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For new remote hire the MSMT lays out some recommendations to avoid DPRK operatives, including, but not limited to:
And something that will assuredly upset cryptocurrency investors and advocates alike:
Despite efforts to sanction and isolate the DPRK, munitions sales, the assistance of Russia and China, and cryptocurrencies have done more than enough to keep Kim Jong-Un wealthy, healthy, and unopposed.
