Important points
- The Multilateral Sanctions Monitoring Team (MSMT) released its second report on North Korea’s (Democratic People’s Republic of Korea) violations and evasion of UN sanctions on Wednesday, October 22nd.
- The report said North Korea used fraudulent IT operations, cryptocurrency theft and cyber espionage to fund the illegal development of weapons of mass destruction and ballistic missile programs.
- The report could further strengthen the global debate on increased oversight of cryptocurrencies and their markets.
Multilateral Sanctions Monitoring Team (MSMT) released its second report on North Korea’s (Democratic People’s Republic of Korea) violations and evasion of United Nations sanctions on Wednesday, October 22nd. The report noted that the country used virtual currencies to evade UN sanctions. North Korea employs fraudulent IT practices, cryptocurrency theftCyber espionage to fund the illegal development of weapons of mass destruction and ballistic missile programs.
What does the MSMT report contain?
According to the report, North Korea, or DPRK, has violated United Nations Security Council resolutions (United Nations Security Council) by performing cyber operations such as cryptocurrency theft and cryptocurrency laundering. Furthermore, North Korea sent personnel skilled in information technology overseas to carry out these malicious operations. The MSMT report notes that “North Korea’s cyber force is a full-spectrum state program operating with advanced technology approaching that of Chinese and Russian cyber programs.”
From January to September this year, North Korea stole a whopping $1.65 billion through various operations. What attracted the most attention was $1.4 billion stolen from Bybit A virtual currency exchange established in February of this year. The country reportedly stole $1.9 billion worth of cryptocurrencies from companies around the world in the past year.
According to the MSMT report, proceeds from the illegal activities were used to fund the illegal development of weapons of mass destruction and ballistic missile programs. North Korea uses a network of its nationals employed in countries such as China, Russia, Argentina, Cambodia, Vietnam, and the United Arab Emirates to launder digital assets into fiat currency. Additionally, the report states that North Korea: stableCoins for trading military equipment and important raw materials such as copper. Stablecoins are digital currencies that are pegged to other assets, such as the US dollar.
North Korea sends IT personnel to countries such as China, Russia, Laos, Cambodia, Equatorial Guinea, Guinea, Nigeria, and Tanzania, with China and Russia leading the way in terms of numbers. These professionals secured employment abroad and sent remittances to North Korea, the report added.
The Multilateral Sanctions Monitoring Team (MSMT) was established on October 16, 2024 as an independent multilateral mechanism to monitor violations of United Nations Security Council Committee Resolution 1718 by North Korea. Current MSMT members are Japan, Australia, Canada, France, Germany, Italy, the Netherlands, New Zealand, South Korea, the United Kingdom, and the United States.
North Korean crypto laundering: Impact on the broader crypto market?
The report could further strengthen the global debate on increased oversight of cryptocurrencies and their markets. Governments may move toward tighter regulation, and cryptocurrencies could become another geopolitically important element in diplomatic relations. Cryptocurrency companies will be forced to take strategic steps and innovate to strengthen the security of their crypto assets. Investors are advised to build guardrails against vulnerabilities by conducting appropriate risk assessments.
