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UN Investigates North Korea on Cyberattacks Funding WMD

The U.N. experts are currently investigating 35 cases in 17 countries where North Koreas were using cyberattacks to raise money for the military objective.

They are calling for sanctions against ships that are providing gasoline and diesel to the country as a precaution for the money raised to be used for weapons of mass destruction (WMD) programs.

Reported last week, experts said North Korea “used cyberspace to launch increasingly sophisticated attacks to steal funds from financial institutions and cryptocurrency exchanges to generate income.”

The experts also mentioned that the U.N. is investigating “at least 35 reported instances of DPRK (Democratic People’s Republic of Korea) actors attacking financial institutions, cryptocurrency exchanges, and mining activity to earn foreign currency.”

The U.N. experts noted that the attacks targeting cryptocurrency exchanges allowed it “to generate income in ways that are harder to trace and subject to less government oversight and regulation than the traditional banking sector.”

A U.S. State Department spokeswoman said: “We call upon all responsible states to take action to counter North Korea’s ability to conduct malicious cyber activity, which generates revenue that supports its unlawful weapons of mass destruction and ballistic missile programs.”

The reported attacks being investigated were attempted violations of U.N. Sanctions. South Korea took the hardest hit, with 10 North Korean cyberattacks. Other countries that were attacked were India, Bangladesh, Chile, Costa Rica, Gambia, Guatemala, Kuwait, Liberia, Malaysia, Malta, Nigeria, Poland, Slovenia, South Africa, Tunisia, and Vietnam.

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Ethereum Developer Indicted for Blockchain and Crypto Expertise Sharing in North Korea

A judge has ruled that the U.S. Department of Justice has enough evidence to move to trial against Ethereum developer Virgil Griffith.

The Ethereum research scientist was arrested in Los Angeles last week and charged for allegedly aiding in the circumvention of U.S. Sanctions that have been placed on the Democratic People’s Republic of North Korea. (North Korea). Griffith will be released from jail once bond had been posted to await trial according to his defense lawyer, Brian Klein.

Klein disclosed in a tweet on Monday that he now represents Griffith, who “looks forward to his day in court, when the full story can come out.”

The U.S. Attorney’s Office of the Southern District of New York announced on Nov. 29, that Griffith had been charged with ‘Conspiracy to Violate the International Emergency Economic Powers Act (IEEPA)’ by traveling to the Democratic People’s Republic of Korea (DPRK or North Korea) in order to deliver a presentation and technical advice on using cryptocurrency and blockchain technology to evade sanctions.”

According to the official complaint, Griffith had explicitly asked and been denied permission to travel to North Korea in order to give the presentation on blockchain technology. Specifically, the document outlines that Griffith had been aiding the development of a crypto exchange between North Korea and South Korea and was fully aware this would violate U.S. sanctions against the DPRK.

Image via Shutterstock

Venezuela Wants Citizens to Pay Taxes in State-Issued Petro Cryptocurrency

Venezuela is moving on a mandate that could see taxes being collected using its state-issued cryptocurrency—the oil-backed Petro. The effort is part of a nation-wide campaign to create mainstream use cases for Venezuela’s cryptocurrency.

In Venezuela, the Bolivarian Council of Mayors has signed off on the “National Tax Harmonization Agreement” which is a campaign to mandate the use of Petro cryptocurrency in tax collection and payments.

According to the announcement, an overwhelming majority of 305 mayors and municipality representatives have voted for the new crypto tax collection mechanism, with 30 mayors opting for fiat-based tax collection.

The campaign is being led by Venezuela’s Vice President Delcy Rodriguez who also leads the implementation of a new information exchange and monitoring system to allow companies to pay their taxes using the state-issued cryptocurrency.

Rodriguez said, “It is the simplification of procedures, making the State’s administrative activity at the service of the people more efficient, of the economic sectors that stimulate economic activity.”

Venezuelan Push For Petro Adoption and Usage

Over the last few years, Venezuela has been combating hyperinflation which has put the nation under extreme economic duress.

Since 2018, the Venezuelan administration of President Nicolas Maduro has used every opportunity to boost the adoption of its national oil- backed Petro cryptocurrency to circumvent the hyperinflation, even leveraging the COVID pandemic crisis to further airdrop the currency to doctors in the nation.

In addition, the Venezuelan government is accepting passport payments with the Petro and its oil companies are also seeking payment in the state-backed cryptocurrency. The country reported that 15 percent of all fuel payments in the country were now utilizing Petro.

Corruption and Sanctions

Venezuela is still facing harsh sanctions from the global community, particularly the United States for allegations of deep corruption in the South American nation’s government. In March 2020, the United States Department of Justice (DOJ) alleged that Venezuelan President Nicolas Maduro leveraged crypto in the illegal drug trade.

Maduro along with 14 other high-ranking Venezuelan officials was been charged for his alleged involvement in a multibillion-dollar cocaine trafficking ring that the DOJ claimed wreaked havoc on American communities by flooding the markets with cocaine for over 20 years. The allegations extend to drug runners, Colombian cartels, and the overall corruption that has plagued Venezuala’s governance.

“These indictments expose the devastating systemic corruption at the highest levels of Nicolas Maduro’s regime,” said DEA Acting Administrator Uttam Dhillon. “These officials repeatedly and knowingly betrayed the people of Venezuela, conspiring, for personal gain with drug traffickers and designated foreign terrorist organizations like FARC. These enforcement actions send a clear message to corrupt officials everywhere that no one is above the law or beyond the reach of US law enforcement.”

OFAC to Begin Sanctioning Companies Facilitating Ransomware Payments

The United States Department of Treasury’s Office of Foreign Assets Control (OFAC) may begin sanctioning US nationals and institutions that help facilitate the payment of a ransom in the advent of a ransomware attack.

Per the official release, the OFAC noted that the demand for ransomware payments, mostly through the use of digital currencies, surged significantly during the pandemic as cybercriminals continued to target online systems to disrupt businesses for Americans and their businesses.

Following this position, the OFAC noted that succumbing to the demands of these ransomware gangs as well as cyber fraudsters may fuel the possibility of such attacks reoccurring.

“Companies that facilitate ransomware payments to cyber actors on behalf of victims, including financial institutions, cyber insurance firms, and companies involved in digital forensics and incident response, not only encourage future ransomware payment demands but also may risk violating OFAC regulations,” OFAC said in a statement.

With the OFAC naming ransomware gangs such as Cryptolocker and Lazarus Group from North Korea in its statement, the report said that payment to these individuals by self or on behalf of others can pose a threat to national security and advised “contacting relevant U.S. government agencies, including OFAC, if there is a reason to believe the cyber actor demanding ransomware payment may be sanctioned or otherwise have a sanctions nexus.”

Risking OFAC’s sanctions is not worth it

As part of its concerted effort to guard national security, the OFAC placed Venezuela as one of the countries on its high-risk target list and has subsequently forced the P2P crypto exchange platform Paxful out of the Venezuelan market.

Crossing paths with the OFAC is not in any businesses’ interest, as breaking the OFAC’s rules or guidelines can lead to further sanctions, which can result in unwanted escalations. In order to forestall interference in the upcoming US Presidential elections by Russian entities, the OFAC has blacklisted some Russian hackers as well as their crypto addresses.

Jury Trial will Decide if Ethereum Dev Nigel Griffith Helped North Korea Evade Sanctions

Ethereum developer Virgil Griffith has been accused by the US Department of Justice of aiding North Korea (DPRK) in evading sanctions and will now face trial by jury.

Virgil Griffith must now face a jury for the DOJ’s claims that a speech the Ethereum dev gave at a Pyongyang crypto conference in 2019 served to empower Kim Jong Un’s administration of the DPRK to evade sanctions and launder money.

According to Law360 on Jan 29, Griffith’s motion to dismiss the criminal charges have now been denied by a New York federal judge. The Ethereum developer’s motion claimed that the charges should be dismissed as his right to free speech is protected by the US Constitution’s first amendment.

Griffith also requested clarification on the charges through a bill of particulars, claiming he has been unable to sufficiently prepare his defense as the four-page indictment against lacked specific detail outlining his criminal conduct.

The New York judge has also rejected Griffith’s request for clarity, stating that he the “adequate notice of the charges” against the Ethereum developer had been provided. The judge further cited text messages that had been allegedly sent by Griffith prior to his speech in Pyongyang which stated:

“We’d love to make an Ethereum trip to the DPRK and set up an Ethereum node […] It’ll help them circumvent the current sanctions on them.”

The judge has now pushed the case forward and Griffith and his legal team will have to convince a jury that the Ethereum developer did not aid the authoritarian regime of North Korea in circumventing US sanctions.

The Case and Consequences

The U.S. Attorney’s Office of the Southern District of New York announced on Nov. 29, 2019 that Griffith had been charged with ‘Conspiracy to Violate the International Emergency Economic Powers Act (IEEPA)’ by traveling to the Democratic People’s Republic of Korea (DPRK or North Korea) in order to deliver a presentation and technical advice on using cryptocurrency and blockchain technology to evade sanctions.”

A January 2020 indictment was put forward against Griffith, accusing him of violating the International Emergency Economic Powers Act (IEEPA).

IEEPA is a US federal law that enables the President to regulate external variables that may threaten national security. If the situation in question is classified as a national emergency, the President is allowed to regulate it in ways he sees fit. Griffith attending a blockchain conference in North Korea has been enough to anger the US, as the Democratic People’s Republic of Korea (DPRK) has long been considered a high-risk country by the United States.

While Griffith has claimed his speech was protected and has characterized his presentation as delivering “information that one could readily learn from a Google search.”

The judge also made note that the fact that Griffith was not explicitly paid for the speech should have no bearing on the jury’s ruling. The judge stated:

“Even if Griffith’s presentation at the conference, taken in isolation, did not qualify as the provision of services, or was exempt under the information exception, evidence at trial may be sufficient to demonstrate his guilt in conspiring to provide services.”

Should Griffith be found guilty of the allegations, the Ethereum developer may potentially be imprisoned for up to 20 years.

The US Treasury Department Imposes Sanction on Suex Crypto Exchange, Accused of Facilitating Ransomware Transactions

The U.S. Treasury Department has announced that it will impose a sanction on the Suex cryptocurrency exchange, which is registered in the Czech Republic.

On Tuesday, September 21, the U.S. Treasury Department disclosed taking such an action against the Suex crypto exchange for allegedly playing a role in facilitating financial transactions for ransomware actors.

Deputy Treasury Secretary Wally Adeyemo told reporters that Suex helped facilitate illegal activity “for their own illicit gains” and had “facilitated transactions involving illicit proceeds for at least eight ransomware variants.”

He further said that more than 40% of the firm’s known transaction history is “associated with illicit actors.”

Adeyemo stated that exchanges such as Suex are critical to cyberattackers’ ability to extract profits, saying that this was the first such action by the Office of Foreign Assets Control (OFAC) against a digital currency exchange and comes after a series of cyberattacks crippled several industries and even threatened U.S. government agencies.

The Treasury mentioned that ransomware payments amounted to more than $400 million in 2020 alone, four times more than that of 2019.

The new sanction means it will be much more difficult for Suex cryptocurrency exchange to do business with U.S. entities. U.S. citizens are typically banned from carrying out transactions with sanctioned entities.

The Treasury also stated that U.S. companies that engage in certain activities with sanctioned actors could be penalized or face enforcement actions, even if they are unaware of such fact.

According to one U.S. official, the aforementioned sanctions aim to disrupt the illicit financial underpinnings of the ransomware economy, which often use cryptocurrencies to facilitate attacks.

Ban on Ransomware Payments

The move by the U.S. Treasury Department is part of a wider administration strategy to discourage ransomware attacks, in which hackers lock up victim’s computers with data-encrypting malware and then demand payments, especially in cryptocurrency, to unlock them.

The U.S. government sees ransomware as a national security threat and criminal menace and urges companies to report extortion attempts and better protect themselves from them.

This year, cyberattacks attributed to Russia-based groups led to the shutdown of the country’s largest meat supplier and a major fuel pipeline operator Colonial Pipeline.

In June, U.S. President Biden warned his counterpart Russian President Vladimir Putin that he expected Moscow to crackdown ransomware attack activities coming from Russia.

In July, President Biden renewed his warning, stating that the U.S. would take any necessary action to defend critical infrastructure against cyberattack.

In October 2020, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) started sanctioning individuals and institutions that help facilitate payments of ransoms amid a string of ransomware attacks witnessed during that time.

The OFAC stated during that time that the demand for ransomware payments, mostly the use of cryptocurrencies, surged significantly during the Covid-19 pandemic as cybercriminals continued to target online systems to disrupt government entities and businesses for Americans.

Mastercard Pulls Russian Banks from its Payment Network

American payment services giant Mastercard has cut off Russian financial institutions from its payment network, a move it said is in compliance with the sanctions being meted by the United States government for the country’s role in the invasion of Ukraine.

According to Mastercard’s announcement, its first priority remains to provide a safe environment for its workers that may be stranded in the region for as long as the crisis lingers.

“Our first priority has been the well-being of our employees and their families. Our teams are working around the clock to help secure their safety, using all the resources at our disposal. We will keep our employees in mind throughout the region as we navigate through this crisis,” Mastercard said in the issued statement. Adding that “as a result of sanction orders, we have blocked multiple financial institutions from the Mastercard payment network. We will continue to work with regulators in the days ahead to abide fully by our compliance obligations as they evolve.”

Related sanctions have been announced to force Russia’s leadership under President Vladimir Putin to seek other measures to address the imploded diplomatic ties with Ukraine.

Apart from sanctions, Mastercard said it will be donating the sum of $2 million to charities like Red Cross, Save the Children, and the firm’s employee assistance fund for humanitarian relief. The gesture from Mastercard echoes related funding and donation that has been sent by key organizations and individuals in the digital currency ecosystem including the Binance exchange per an earlier, reported by Blockchain.News.

The sanctions on Russia have weighed in on the Ruble which has continued to lose its value against other sovereign fiat notes. However, the Ruble has grown in trading with cryptocurrencies, a development that shows the majority of Russians are using these digital assets to bypass the sanctions from Mastercard and other bodies.

The Russia-Ukraine War Might Accelerate CBDC Issuance, Former BOJ Official Says

The sanctions slapped on Russia based on its invasion of Ukraine might prompt more nations to adopt central bank digital currencies (CBDCs) as a shield against the U.S. dollar’s supremacy in the global financial system, according to the former Bank of Japan (BOJ) executive Hiromi Yamaoka.

China has already set the ball rolling with its digital yuan. Yamaoka noted:

“While sanctions using financial infrastructure are necessary in extreme cases like the Ukraine crisis, they are ‘emergency means’ that should not be overused.”

With U.S. allies like Japan joining the sanctions, Yamaoka believes a situation that pushed Russia into default was intentionally developed.

He pointed out:

“The most effective, powerful weapon was the freezing of Russia’s foreign reserves.”

Following concerns from the Group of Seven (G7) nations, Japan recently requested crypto exchanges to cancel transactions of crypto assets that were subject to asset-freeze sanctions against Russia and Belarus.

Yamaoka stated that national security and defence would become key issues when discussing CBDCs. He added:

“There’s a chance a country like China could promote usage of digital yuan for cross-border transactions and create a currency bloc to counter the dollar’s dominance.”

During his BOJ tenure, Yamaoka was the head of the payment and settlement systems department. Therefore, he is well versed in CBDC and global settlement affairs.

Likewise, speaking on CNBC’s Squawk Box Asia Monday, financial technology consultant and author Richard Turrin shared similar sentiments that China’s digital yuan could counter the dollar’s dominance in international trade settlements this decade.

He stated:

“Remember, China is the largest trading country, and you’re going to see digital yuan slowly supplant the dollar when buying things from China.”

Turrin added that there was a high likelihood nations would seek other payment channels to stop the current dollar dependence as part of the “risk management exercise.”

EU Council Expands Sanctions on Crypto Wallets, Targeting Russian Officials

The European Union Council has imposed another round of sanctions on Russia with an extended ban on cryptocurrency-focused transactions for already blacklisted Russian individuals and their relatives.

According to the latest round of the sanctions, there is now a new “prohibition on providing high-value crypto-asset services to Russia, a move that is so defined in order to “contribute to closing potential loopholes.”

The sanction also follows other financial ban measures, including additional sanctions on four major Russian banks, accounting for about 23% of the banking sector shares. Coupled with the previous ban from the SWIFT network, the latest ban on these banks will imply a complete alienation of Russians from the European Union markets.

Russia has continued to receive sanctions due to its invasion of Ukraine last month. Per new insights into the ongoing war, the country’s forces target the civilian population, amounting to war crimes against international human rights.

“These latest sanctions were adopted following the atrocities committed by Russian armed forces in Bucha and other places under Russian occupation. The aim of our sanctions is to stop the reckless, inhuman, and aggressive behaviour of the Russian troops and make clear to the decision-makers in the Kremlin that their illegal aggression comes at a heavy cost,” said Josep Borrell, High Representative for Foreign Affairs and Security Policy.

Since the sanctions started rolling in, Russian officials have explored a number of alternative measures to bypass the sanctions being meted out by the EU and the United States. After a long time of considering banning Bitcoin (BTC) transactions and mining, Moscow has started advocating for legalizing mining as a way to cushion the sanctions.

Additionally, Moscow has considered accepting Bitcoin for international transactions as the financial sanctions have prevented the country’s ability to make transactions through Dollar dominated fiat currency. The essence of the sanctions has been to limit Russia’s economic and financial capability to continue the war, and perhaps, these new sanctions may force President Vladimir Putin to sheath the sword and adhere to a permanent ceasefire.

US Treasury Department Imposes Sanctions on Russian Crypto Mining Firm Bitriver

The United States announced that it has added Bitriver, a Russian cryptocurrency mining firm, to its sanctions list.

The latest movement is part of the US ongoing efforts to block Russian companies from accessing the global financial network amid Russia’s invasion of Ukraine.

The Treasury Department’s Office of Foreign Asset Control (OFAC), the agency which handles the U.S. sanctions list, announced on Wednesday that it has put sanctions on Bitriver and 10 of its Russia-based subsidiaries by blocking them from accessing the global financial market. OFAC accused Bitriver and the subsidiaries of providing technical support to Russia in its war against Ukraine.

OFAC also said that it has put sanctions on Transkapitalbank, a Russian commercial bank. Transkapitalbank is known for serving several banks in Asia, including in China, and the Middle East, and has suggested options to evade international sanctions.

The Treasury further mentioned that it has targeted a global network of over 40 people and companies led by US-designated Russian oligarch Konstantin Malofeyev, including firms “whose primary mission is to facilitate sanctions evasion for Russian entities.”

In a statement, Brian Nelson, the Treasury’s under-secretary for terrorism and financial intelligence, talked about the development and said: “Treasury can and will target those who evade, attempt to evade, or aid the evasion of US sanctions against Russia, as they are helping support Putin’s brutal war of choice.”

“The United States will work to ensure that the sanctions we have imposed, in close coordination with our international partners, degrade the Kremlin’s ability to project power and fund its invasion,” Nelson elaborated further.

Mounting International Pressure

The US has imposed several series of sanctions on Russia since its February 24 invasion of Ukraine, including the nation’s largest financial institutions like Alfa Bank and Sberbank, major state-owned enterprises, as well as Russian government officials and their family members, including Putin himself.

The latest sanction on Bitriver and other Russian entities follow an announcement made early this month by the Biden administration about its plans to impose additional sanctions targeting Russian financial institutions, including Kremlin officials and their family members.

The fresh sanctions packages are being made through collaboration with European Union allies and the Group of 7 (G7) nations.

All Russian flights have been banned from Canadian, EU, US, and UK airspace. The UK, EU, and the U.S. have sanctioned over 1,000 Russian individuals and businesses in total, including wealthy business leaders – the so-called oligarchs – who are regarded as close to the Kremlin.

The sweeping measures follow mounting global pressure on Russia amid its invasion of Ukraine.