113 Virtual Currency Accounts Forfeited in US Crackdown on North Korean Hacking

News | March 15, 2024 By:

On Tuesday, March 5, 2024, the United States District Court for the District of Columbia issued a ruling in a case involving the forfeiture of 113 virtual currency accounts linked to alleged hacks of virtual currency exchanges by North Korean operatives.

According to the Second Amended Complaint filed by the United States, the hackers stole approximately $250 million in virtual currencies, including Bitcoin, from four virtual currency exchanges, and then laundered the money through an elaborate series of transactions. The hackers used peel chains, a technique where a large quantity of virtual currency is transferred through a succession of addresses, to conceal the path of the funds on the blockchain.

The United States alleges that the stolen virtual currency was then deposited into the Defendant Properties, which include 113 virtual currency accounts, and that the funds were then used to promote and engage in money laundering activities.

The case arises from the United States’ investigation of the hacks, which were attributed to North Korean actors by the U.N. Security Council’s expert panel. The panel identified a series of hacks sponsored by North Korea targeting virtual currency exchanges, with the proceeds estimated at up to $2 billion.

The United States commenced the forfeiture action in early 2020 and later amended the complaint to add 33 more Defendant Properties. The United States posted a notice online and served direct notice on Tian Yinyin and Li Jiadong, two individuals who have been indicted for money laundering and operating an unlicensed money transmitting business in a separate case before the Court.

However, the United States received no response from Tian and Li, and the Clerk of Court entered a default judgment against the Defendant Properties. The United States then filed a motion for default judgment, which was denied without prejudice by the Court.

The United States re-posted notice of the action on its forfeiture website for 30 days and emailed notice of the second amended complaint to known potential claimants, including Tian and Li. However, no one filed a claim in response to the direct notice or notice by internet publication by the deadlines to do so.

The United States District Court for the District of Columbia has now granted the United States’ motion for default judgment and ordered the forfeiture of the Defendant Properties. The Court found that the United States had established that the funds in the Defendant Properties were linked to the hacking activities and were subject to forfeiture.

The ruling is a significant victory for the United States in its efforts to combat money laundering and cybercrime, and highlights the growing threat posed by North Korean hackers to the global financial system.

Please contact BlockTribune for access to a copy of this filing.