U.S. Court Orders Forfeiture of 279 Cryptocurrency Accounts Linked to Hacks of Exchanges by North Korean Operatives

News | May 22, 2024 By:

On Wednesday, May 8, 2024, the United States District Court for the District of Columbia ordered the forfeiture of 279 virtual currency accounts allegedly linked to money laundering.

The court case involved over $50 million worth of funds stolen from three cryptocurrency exchanges in 2018 and 2019. According to court documents, North Korean state-sponsored hackers were able to infiltrate accounts at the exchanges and transfer money using malware. They then reportedly laundered the funds through a complex scheme involving thousands of transactions designed to conceal the origin and ownership of the stolen cryptocurrency.

As part of this scheme, conspirators are accused of “chain hopping” which refers to converting one type of cryptocurrency to another to make the funds more difficult to trace on the blockchain. They also allegedly opened new virtual currency accounts using falsified identity information. Funds were transferred through these accounts as well as through foreign online traders known for not collecting legally required information about customers or the source of funds.

The court documents state that analysis of transaction patterns on the blockchain led investigators to group transactions into “clusters” and identify 279 virtual currency accounts that received stolen funds or were otherwise involved in laundering the money. These accounts, containing Bitcoin, Ether, and other cryptocurrencies, became the defendants in the forfeiture case against the funds.

After two failed attempts, prosecutors from the U.S. Department of Justice were able to properly notify over 100 potential claimants of the funds through emails and an online forfeiture notice website. However, no one came forward to make a claim. As a result, the court ruled in favor of the government’s motion for default judgment, meaning the 279 accounts will be forfeited, and the virtual currency funds distributed to victims of the hacks.

The court found the government adequately proved the accounts were subject to forfeiture either as property involved in money laundering crimes or as funds traceable to property involved in the alleged conspiracy to launder stolen cryptocurrency and promote ongoing criminal activity.

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