Cryptocurrency expert faces charges of helping North Korea launder money, avoid sanctions

Federal prosecutors have charged a cryptocurrency expert with violating economic sanctions against North Korea by presenting at a conference there this year after the U.S. government denied his request to travel to Pyongyang.

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Virgil Griffith is awaiting a federal court appearance Monday in Los Angeles. He was arrested on Thanksgiving in Los Angeles International Airport.

The criminal complaint claims Griffith violated the International Emergency Economic Powers Act by traveling to North Korea to present advice at the Pyongyang Blockchain and Cryptocurrency Conference on how to use blockchain technology to skirt federal sanctions and launder money.

The economic powers act prohibits U.S. citizens from exporting such services to North Korea without a license from the U.S. Department of the Treasury or the Office of Foreign Assets Control.

“Griffith provided highly technical information to North Korea, knowing this information could be used to help North Korea launder money and evade sanctions," Geoffrey Berman, the United States Attorney for the Southern District of New York, said in a statement. “In allegedly doing so, Griffith jeopardized the sanctions Congress and the president have enacted to place maximum pressure on North Korea’s dangerous regime.”

Griffith has contributed to the hacker magazine 2600, which tweeted Friday that Griffith’s arrest amounted to “an attack on all of us.”

“I kept warning him it was a trap,” the magazine’s editor, Emmanuel Goldstein said in a separate Twitter post, adding Griffith “insisted on” speaking to the FBI without a lawyer. “What’s ironic is that afterwards, he was convinced they totally got where he was coming from.”

The complaint notes that Griffith “appeared to work for the North Korean government,” answered specific questions about cryptocurrency, and seemingly formulated plans to facilitate the exchange of digital money between North Korea and South Korea, “despite knowing that assisting with such an exchange would violate sanctions.”

The U.S. Department of State previously denied Griffith permission to travel to North Korea and at no time was Griffith granted permission from OFAC, or any branch of the federal government, to provide goods, services or technology to North Korean representatives.

“There are deliberate reasons sanctions have been levied on North Korea,” FBI Assistant Director-in-Charge William F. Sweeney Jr. said. “The country and its leader pose a literal threat to our national security and that of our allies. We cannot allow anyone to evade sanctions, because the consequences of North Korea obtaining funding, technology and information to further its desire to build nuclear weapons put the world at risk.”

The U.S. and the U.N. Security Council have imposed increasingly tight sanctions on North Korea in recent years to try to rein in its dissolve its nuclear program. Pyongyang says it wants the U.S. to get the sanctions lifted and provide security guarantees before North Korea will abandon its advancing nuclear arsenal; the U.S. has said the North has to take substantial steps toward denuclearization before the sanctions will come off. Sanctions have also been imposed to punish the regime for human rights violations and for cyberattacks, such as the 2014 Sony Pictures hack and 2017 WannaCry ransomware attack.

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“While these measures have exacted a toll on the North Korean economy,” the Council of Forgiven Relations said in a report, “their effectiveness has been undermined by the failure of some countries to enforce them and the willingness of companies to flout them.”

A self-described former hacker who went on to get a doctorate in computer science, Griffith became something of a tech-world enfant terrible in the early 2000s. He told The New York Times in 2008 that he considered himself a “disruptive technologist.”

In 2007, Griffith created WikiScanner, a tool that aimed to unmask people who anonymously edited entries in Wikipedia, the crowdsourced online encyclopedia. WikiScanner essentially could determine the business, institutions or government agencies that owned the computers from which some edits were made.

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It quickly identified businesses that had sabotaged competitors’ entries and government agencies that had rewritten history, among other findings.

“I am quite pleased to see the mainstream media enjoying the public-relations disaster fireworks as I am,” Griffiths told The Associated Press in 2007.

The charge of conspiring to violate the economic powers act, which Griffith is facing, carries a maximum term of 20 years in prison. Berman, along with counterintelligence and national security officials, will handle the case.

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This story contains material from the Associated Press.