Two charged with money laundering $100 million in cryptocurrency

Hackers Tian Yinyin, left, and Li Jiadong were accused of money laundering.

Two Chinese nationals were charged with laundering over $100 million worth of cryptocurrency from a hack of a cryptocurrency exchange. The funds were stolen by North Korean actors in 2018, as detailed in the civil forfeiture complaint also unsealed today.

In the two-count indictment unsealed Monday (March 2)  in the District of Columbia, Tian Yinyin, and Li Jiadong, were charged with money laundering conspiracy and operating an unlicensed money transmitting business.

“These defendants allegedly laundered over a hundred million dollars worth of stolen cryptocurrency to obscure transactions for the benefit of actors based in North Korea,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “Today's actions underscore that the Department will pierce the veil of anonymity provided by cryptocurrencies to hold criminals accountable, no matter where they are located.”

“Today, we are publicly exposing a criminal network’s valuable support to North Korea’s cyber heist program and seizing the fruits of its crimes,” said Assistant Attorney General John C. Demers of the Justice Department’s National Security Division.

“North Korea continues to attack the growing worldwide ecosystem of virtual currency as a means to bypass the sanctions imposed on it by the United States and the United Nations Security Council," said Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Don Fort. 

According to the pleadings, in 2018, North Korean co-conspirators hacked into a virtual currency exchange and stole nearly $250 million worth of virtual currency. The funds were then laundered through hundreds of automated cryptocurrency transactions aimed at preventing law enforcement from tracing the funds. The North Korean co-conspirators circumvented multiple virtual currency exchanges’ know-your-customer controls by submitting doctored photographs and falsified identification documentation. A portion of the laundered funds was used to pay for infrastructure used in North Korean hacking campaigns against the financial industry.

The pleadings further allege that between December 2017 and April 2019, Yinyin and Jiadong laundered over $100 million worth of virtual currency, which primarily came from virtual currency exchange hacks. The defendants operated through independent as well as linked accounts and provided virtual currency transmission services for a fee for customers. The defendants conducted business in the United States but at no time registered with the Financial Crimes Enforcement Network (FinCEN).

The pleadings further allege that the North Korean co-conspirators are tied to the theft of approximately $48.5 million worth of virtual currency from a South Korea-based virtual currency exchange in November 2019. As with the prior campaign, the North Korean co-conspirators are alleged to have laundered the stolen funds through hundreds of automated transactions and submitted doctored photographs and falsified identification documentation. The pleadings identify how the North Korean co-conspirators used infrastructure in North Korea as part of this campaign.

The civil forfeiture complaint specifically names 113 virtual currency accounts and addresses that were used by the defendants and unnamed co-conspirators to launder funds. The forfeiture complaint seeks to recover the funds, a portion of which has already been seized.

Monday, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) also imposed sanctions on Yinyin, Liadong, and numerous cryptocurrency addresses related to their involvement in activities facilitating North Korean sanctions evasion based on their services and support for malicious cyber enabled activities linked to North Korean actors.

Authorities say a portion of the stolen money has already been recovered.

“The hacking of virtual currency exchanges and related money laundering for the benefit of North Korean actors poses a grave threat to the security and integrity of the global financial system,” said US Attorney Timothy J. Shea of the District of Columbia. “These charges should serve as a reminder that law enforcement, through its partnerships and collaboration, will uncover illegal activity here and abroad, and charge those responsible for unlawful acts and seize illicit funds even when in the form of virtual currency.”