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North Korea Might Evade US Sanctions Using Cryptocurrencies

North Korea | US Sanctions | Cryptocurrencies

With the new US economic sanctions pushing a bunch of economies to bleed, North Korea reportedly inclines towards the use of cryptocurrencies to evade the subsequent break-down. A duo of financial intelligence analysts from Washington D.C alleged that the country is looking into the development of a native crypto asset to further assist moving money across borders.

In an interview with Hong Kong-based business news publication, Asia Times, Lourdes Miranda and Ross Delston, independent financial analysts believe that  North Korea has been using cryptocurrencies to circumvent U.S. led economic sanctions. The pair explains:

“International criminals everywhere prefer cryptocurrencies and the [Democratic People’s Republic of Korea] DPRK is no exception. Cryptocurrencies have the added advantage to the DPRK of giving them more ways to circumvent U.S. sanctions. They can do so by using multiple international exchangers, mixing and shifting services – mirroring the money laundering cycle. 

They further elaborated that North Korea would use a “mixer” also known as a “Laundry, Tumbler and a Washer”, which entails moving cryptocurrencies in order to hide their tracks; often sending the same type of cryptocurrency back to the original source.

It is equivalent to requesting change for a $100 and receiving different denominations in return totaling a $100.” 

To further obscure the origin of funds, DPRK could switch to a different cryptocurrency as warned by Miranda and Delston. 

It is likely that North Korea will follow the lead of Iran to create their own cryptocurrency for the purpose of evading economic sanctions. The analyst duo further suggests:

“their own cryptocurrency would also facilitate their ability to open online accounts under the guise of a non-adversarial nation using anonymous communication to conceal the user’s locations and usage on the internet.”

In order to hide the fund’s origin country, DPRK could create its own wallet services to move funds to and from European-based accounts that feature no personally identifiable information. 

“For example, DPRK could open an online wallet using a Russia-based service, transfer its cryptocurrency into a Bulgaria-based wallet service and then transfer it again into a Greece-based wallet service, all through anonymous communication and using their own blockchain.”

After playing around with a  number of anonymous accounts, the cryptocurrency will head towards European exchanges that have relationships with a U.S. based bank where they’ll be converted to USD.

“Voilà, the DPRK now has U.S. dollars with none of those pesky sanctions attached.”

Iran released the first details about its own native cryptocurrency, the digital Rial last month. Like North Korea, both Russia and Iran have been said to be using cryptocurrencies in order to evade international economic sanctions.

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