US, European officials crack down on crypto service accused of laundering money for North Korean leaders

Originally Published: 29 NOV 23 15:52 ET
Updated: 29 NOV 23 21:03 ET

Washington (CNN) — The US Treasury Department on Wednesday sanctioned a cryptocurrency service accused of helping launder millions of dollars for the North Korean regime.

The move marked the latest effort to crack down on a key source of funding for Pyongyang’s nuclear weapons and missile programs.

The FBI and European law enforcement agencies have also seized the website of the crypto service, known as Sinbad, according to a notice that appeared on the website Wednesday.

About half of North Korea’s missile program has been funded by cyberattacks and cryptocurrency theft, a senior White House official said in May.

US officials for years have looked for new ways to intercept some of the stolen cryptocurrency before the North Koreans try to convert it to the hard currency needed to buy weapons.

Pyongyang’s ability to exploit cryptocurrency and other tech firms to fund its weapons program is part of a regular set of intelligence products presented to senior US officials, including, sometimes President Joe Biden, a senior US official previously told CNN.

The US Treasury on Wednesday accused Sinbad of laundering a “significant portion” of three different hacks of cryptocurrency firms in the last two years in which the North Koreans allegedly stole at least $100 million each time. CNN could not immediately reach Sinbad representatives.

Sinbad is a so-called “mixing service,” which are publicly available tools used to obscure the source of cryptocurrency. Analysts say North Korea has leaned heavily on mixers to move money amid greater scrutiny from law enforcement agencies from the US, South Korea and elsewhere.

A CNN investigation earlier this year spotlighted how the South Korean intelligence service in January worked with private crypto-tracking experts to seize about $1 million in cryptocurrency that North Koreans had stolen from a victim.

The North Korean regime has also used thousands of IT workers working overseas, sometimes posing as other foreign nationals, to quietly raise revenue, according to US officials and North Korea experts. Another CNN investigation identified one cryptocurrency entrepreneur who said his firm had unwittingly sent a North Korean IT worker tens of thousands of dollars.

Sinbad became one of Pyongyang’s crypto mixers of choice, according to experts, after the US Treasury in August 2022 sanctioned another mixer popular with the North Koreans.

“The laundering tactics of North Korean cyber criminals continued to evolve,” Nick Carlsen, who was an FBI intelligence analyst focused on North Korea until 2021, told CNN. Despite the seizure of Sinbad’s public website, its dark-web site is still online, according to Carlsen.

Amid the US law enforcement crackdown on Sinbad, “we are already seeing [North Korea] move elsewhere,” said Carlsen, who now works at fraud-investigating firm TRM Labs, referencing multiple other crypto mixing services that the North Koreans are still using.

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