Crypto developer arrested ‘for helping North Korea’

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A cryptocurrency researcher has been arrested for allegedly helping the North Korean government use the technology to launder money and evade sanctions designed to restrict its nuclear programme.

Virgil Griffith, 36, attended a conference in Pyongyang in which he gave a presentation on topics that were pre-approved by North Korean officials, according to the US Department of Justice.

Aware of sanctions against the country, Griffith had previously applied to the State Department for permission to attend the conference.

Although this was refused, the legal complaint against him alleges that Griffith attended the conference anyway, travelling via China.

He paid €100 for a visa which he attached to a paper separate from his US passport to avoid creating physical proof that he had been to North Korea.

After he had completed his presentation, titled “Blockchain and Peace”, Griffith discussed helping exchange cryptocurrency between North and South Korea, which he acknowledged would be in violation of the sanctions.

The complaint alleges that following the trip he expressed a desire to return to North Korea, and also seek alternate citizenship.

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The FBI’s assistant director-in-charge William Sweeney said: “There are deliberate reasons sanctions have been levied on North Korea.

“The country and its leader pose a literal threat to our national security and that of our allies,” Mr Sweeney added.

“Mr Griffith allegedly travelled to North Korea without permission from the federal government, and with knowledge what he was doing was against the law.

“We cannot allow anyone to evade sanctions, because the consequences of North Korea obtaining funding, technology, and information to further its desire to build nuclear weapons put the world at risk.

“It’s even more egregious that a US citizen allegedly chose to aid our adversary.”

TOPSHOT - This undated picture released by North Korea's official Korean Central News Agency (KCNA) on September 3, 2017 shows North Korean leader Kim Jong-Un (C) looking at a metal casing with two bulges at an undisclosed location. North Korea has developed a hydrogen bomb which can be loaded into the country's new intercontinental ballistic missile, the official Korean Central News Agency claimed on September 3. Questions remain over whether nuclear-armed Pyongyang has successfully miniaturise
Image: North Korea says it has continued parts of its nuclear programme

Pyongyang has consistently launched missiles into the seas neighbouring it – most recently near a disputed sea boundary on Friday – following a detente in negotiations between leader Kim Jong Un and US President Donald Trump.

Analysts claim these missiles are an attempt by North Korea to pressure the US to make concessions in their stalemate over the country’s nuclear ambitions.

International sanctions have severely hampered Pyongyang’s ability to access international financial systems and markets, driving the government’s embrace of illicit forms of generating income, prominently including cyber heists.

In this handout image provided by South Korean Presidential Blue House, President Moon Jae-in xxx during the National Security Council at the Presidential Blue House on July 29, 2017 in Seoul, South Korea. North Korea launched another test missile, believed to be an Inter Continental Ballistic Missile (ICBM), which travelled 45 minutes before splashing down in the Exclusive Economic Zone (EEZ) of Japan.
North Korea may be building more ballistic rockets despite US agreement

North Korean cryptocurrency activities have grown since 2017 when the UN passed its most recent sanctions following the country testing intercontinental ballistic missiles.

Pyongyang’s holdings of cryptocurrencies could now be as high as $ 735m (£561m), depending on valuation, according to the Royal United Services Institute, but they could be much lower.

Among the criminal activities which the state has engaged in around cryptocurrencies have been the financially-motivated ransomware attack which hit the NHS in 2017, as well as using cyber attacks to steal millions from cryptocurrency exchanges.

An elite hacking unit based in the country is perhaps the only state-sponsored group in the world which has a financially-motivated mission, rather than being focused on collecting intelligence for national security purposes.

Its operations began in February 2014 according to cyber security firm FireEye, “and were likely influenced by financial sanctions enacted in March 2013 that blocked bulk cash transfers and restricted North Korea’s access to international banking systems”.

North Korea's leader Kim Jong Un walks southward with US President Donald Trump, after Trump briefly stepped into the north of the Military Demarcation Line that divides North and South Korea, in the Joint Security Area (JSA) of Panmunjom in the Demilitarized zone (DMZ) on June 30, 2019. (Photo by Brendan Smialowski / AFP)        (Photo credit should read BRENDAN SMIALOWSKI/AFP/Getty Images)
Image: Negotiations between the US and North Korea failed this year

North Korea has historically manufactured drugs, counterfeit currency and engaged in smuggling to keep its economy afloat, and FireEye describes the hacking as a similar form of activity.

A secretive agency known informally as Office 39 has been a critical asset of the state by generating black market revenues since at least the 1970s.

It is estimated to bring $ 1bn a year through illicit activities, including counterfeiting US dollar currency, producing narcotics, and even smuggling gold.

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