Key Points
The Multilateral Sanctions Monitoring Team (MSMT) published its second report on North Korea’s (Democratic People’s Republic of Korea) violations and evasions of UN sanctions on Wednesday, October 22.
According to the report, North Korea employed fraudulent IT work, cryptocurrency theft, and cyber espionage to fund unlawful development of its WMD and ballistic missile programs.
The report may further strengthen the global discourse on increased scrutiny of cryptocurrencies and their market.
The Multilateral Sanctions Monitoring Team (MSMT) published its second report on North Korea’s (Democratic People’s Republic of Korea) violations and evasions of UN sanctions on Wednesday, October 22. The report noted that the country used cryptocurrency to circumvent the UN sanctions. North Korea employed fraudulent IT work, cryptocurrency theft, and cyber espionage to fund unlawful development of its WMD and ballistic missile programs.
What Does the MSMT Report Say?
According to the report, North Korea, or DPRK, has committed violations of United Nations Security Council resolutions (UNSCRs) by conducting cyber operations such as cryptocurrency theft and cryptocurrency laundering. Moreover, North Korea sent people adept in information technology to foreign countries to carry out these ill-intended operations. “The DPRK’s cyber force is a full-spectrum, national program operating at a sophistication approaching the cyber programs of China and Russia,” the MSMT report noted.
This year, from January to September, through various operations, North Korea stole a massive $1.65 billion. The most high-profile was the theft of $1.4 billion from the Bybit cryptocurrency exchange in February of this year. The country had reportedly stolen cryptocurrencies worth $1.9 billion in the past year from companies across the globe.
As per the MSMT report, the revenue generated from illicit activities was used for funding the unlawful development of its WMD and ballistic missile programs. North Korea uses a network of its nationals employed abroad in countries such as China, Russia, Argentina, Cambodia, Vietnam, and the United Arab Emirates to launder the digital assets into fiat currencies. Additionally, the report notes that North Korea used stablecoins to trade military equipment and crucial raw materials such as copper. The stablecoins are the digital currencies that are pegged to other assets, such as the U.S. dollar.
North Korea deployed IT workers in countries such as China, Russia, Laos, Cambodia, Equatorial Guinea, Guinea, Nigeria, and Tanzania, with China and Russia leading in numbers. These professionals secured employment in foreign countries and sent remittances back to North Korea, the report added.
The Multilateral Sanctions Monitoring Team (MSMT) was constituted back on October 16, 2024, as a multilateral independent mechanism to monitor violations of U.N. Security Council Committee resolution 1718 by North Korea. The current MSMT members are Japan, Australia, Canada, France, Germany, Italy, the Netherlands, New Zealand, the Republic of Korea, the United Kingdom, and the United States.
North Korea’s Crypto Laundering: Implications for the Broader Cryptomarket?
The report may further strengthen the global discourse on increased scrutiny of cryptocurrencies and their market. The governments may go for regulatory tightening, and crypto may become another geopolitically significant factor in diplomatic relationships. The crypto firms will be forced to take strategic measures and innovate to enhance the security of crypto assets. The investors are advised to build guardrails against vulnerabilities by doing proper risk assessments.
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