The political and diplomatic relations, since the Korean war, between North Korea and the United States have been historically unfriendly. Recently, it was reported that North Korea is attempting to evade the US economic sanction with the help of cryptocurrencies. The country is also developing their cryptocurrency to assist moving money across borders.
Lourdes Miranda and Ross Delston, independent financial analysts, in an interview with Hong-Kong based news agency Asia Times stated that North Korea has been using cryptocurrencies to avoid U.S. economic sanctions. They further stated,
“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 moreover explained that North Korea might use a complicated way to transfer the money across the border. “Laundry, Tumbler and a Washer” is the name given to the mixer that the nation is anticipated to use as a way to move cryptocurrencies, so it hides their tracks. They also warned that to disguise the source of the funds DPRK could switch to a different cryptocurrency, Which often includes sending the same type of cryptocurrency back to the source.
“It is equivalent to requesting change for a $100 and receiving different denominations in return totaling a $100,” they said.
Miranda and Delston insinuate that having “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.”
The analysts insisted on focussing that they may use different accounts to facilitate the transfer of funds. According to them:
“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 the successful transfer of the funds, the cryptocurrencies would be sent to European exchanges where they will be converted to the U.S. with the help of U.S. based banks that have ties with them.
“Voilà, the DPRK now has U.S. dollars with none of those pesky sanctions attached.”
Russia and Iran are also known to use the digital currencies internationally to evade the sanctions.