US cracks down on North Korean-backed fraud ring that netted millions in crypto and cash
The fraud ring made over $5 million illegally and took hundreds of thousands in fees from US conspirators. Four North Korean nationals were charged for stealing nearly $1 million in cryptocurrency in a separate indictment, as per reports.
Authorities searched 29 'laptop farms', places where laptops were used for the scam, in 16 US states and seized 29 financial accounts used to launder money and crypto. The scheme involved stealing identities of over 80 Americans and getting fake remote jobs at more than 100 companies, including many big Fortune 500 firms, as per the report by Fortune.
North Korean IT workers traveled to the United Arab Emirates, used stolen IDs to pose as remote workers, got jobs at American companies, and stole digital currency to help fund North Korea's nuclear weapons program.
The fraud evolved from using fake IDs to creating American front companies that helped hide the North Korean workers' true identity and made the scheme look real. These front companies received laptops sent by US companies for remote workers. The laptops were hosted at 'laptop farms' to let North Korean workers access them remotely, as per the report by Fortune.
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The stolen money was sent to North Korea's leadership to support their weapons and missile programs. FBI Assistant Director Roman Rozhavsky said North Korea uses fraud and identity theft to fund its weapons programs, but the FBI is working hard to stop them.
Thousands of trained North Korean IT workers are spread worldwide, tricking companies into hiring them remotely to steal money and gather intelligence. The UN estimates this scheme earns North Korea between $200 million and $600 million yearly, not counting crypto theft which could be billions, as mentioned by Fortune report.
Fake companies, real damage
US Attorney Theodore Hertzberg said these charges warn the public about dangers from state-sponsored cybercriminals and urged companies to carefully check remote workers. Hertzberg advised companies to hire Americans and verify employees thoroughly, preferably in person, especially in the virtual currency space.
Zhenxing 'Danny' Wang founded a fake software company called Independent Lab. Laptops were sent to him at his home where he installed remote software for North Korean workers overseas to use. Wang collected payment from US companies and sent the money to overseas conspirators.
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Other accomplices included people in New York, California, and even an active-duty US military member, hosting laptop farms for money. The fraud caused at least four big companies to lose $100,000 or more each. The fraud also involved a California defense contractor from which sensitive military tech documents were stolen, as per the Fortune report.
The fraud affected companies in many states across the US, including California, Massachusetts, New York, New Jersey, Florida, Georgia, and more. Security expert Michael Barnhart said the arrests show North Korean IT workers don't just steal money but can also harm national security by accessing trusted company networks.
Barnhart warned companies to rethink hiring processes to avoid such threats. Assistant Attorney General John Eisenberg said the Justice Department will keep fighting these cyber-enabled networks to stop North Korea's illicit programs. The second indictment described four North Korean IT workers who used fake IDs to get jobs at US companies in Atlanta and stole nearly $1 million in crypto, according to the report by Fortune.
Stolen crypto and cover-up tricks
They laundered the stolen crypto to hide its origin before sending it to North Korea. One worker, Kim Kwang Jim, used a fake Portuguese ID to get hired and then stole millions of crypto tokens by changing the company's smart contract code.
Kim tried to excuse the theft by blaming a 'github refactor' but was accused via Telegram messages by the company founder. Another worker, Jong Pong Ju, used the fake name 'Bryan Cho' to get hired and stole crypto worth about $175,000. Jong helped hire another fake employee called 'Peter Xiao,' who was really another defendant, as stated by Fortune report.
Jong sent a video using a fake Malaysian driver's license to prove his fake identity to the company and gained more access. After stealing crypto, Jong said he 'accidentally dropped the private key' in a public file on Github, as a cover story. The stolen crypto was laundered using a crypto mixer called Tornado Cash, which hides the money's trail.
Kang Tae Bok, another defendant, opened accounts with fake IDs to receive the mixed crypto funds. The FBI will soon release a new 'Wanted' poster for these defendants. Tornado Cash and Wang did not respond to requests for comments, as per the Fortune report.
US Attorney Hertzberg said the case shows the danger North Korea poses by using fake remote workers and that the US will prosecute anyone stealing from American companies.
FAQs
Q1. How did North Korean hackers steal millions from US companies?
They used fake identities and front companies to get remote jobs and stole money and cryptocurrency.
Q2. What is the US doing to stop North Korean fraud schemes?
The US government is arresting suspects, shutting down fake companies, and warning businesses to check remote workers carefully.
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