Via Financial Times

US investigators have arrested Virgil Griffith, a 36-year-old cryptocurrency specialist, for allegedly helping North Korea use blockchain technology in violation of US sanctions, the justice department has announced.

The Federal Bureau of Investigation arrested Mr Griffith on Thursday, officials said, for travelling illegally to North Korea to give a presentation on how to use cryptocurrency, as well as developing plans to transfer it between North and South Korea.

Geoffrey Berman, the US attorney for the Southern District of New York, said in a statement: “As alleged, Virgil Griffith provided highly technical information to North Korea, knowing that this information could be used to help North Korea launder money and evade sanctions.

“In allegedly doing so, Griffith jeopardised the sanctions that both Congress and the president have enacted to place maximum pressure on North Korea’s dangerous regime.”

According to the complaint unsealed in a Manhattan federal court on Friday, Mr Griffith travelled to North Korea to speak at a cryptocurrency conference at some point around April this year. The FBI said he did so via China, despite having previously been refused permission by the US state department.

While there, prosecutors allege he gave a presentation entitled “Blockchain and Peace”, during which he discussed how blockchain technology could be used to benefit North Korea. They added that he had preapproved his presentation with North Korean officials, who encouraged him to talk about how cryptocurrencies could be used to evade sanctions and launder money.

Mr Griffith has not yet had the opportunity to respond to any of the allegations made against him and was not available for comment.

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A confidential UN study revealed by Reuters earlier this year found Pyongyang had generated around $2bn for its weapons of mass destruction programme by using sophisticated cyber attacks to steal from banks and cyber-exchanges.

US officials are also concerned about the possibility that foreign countries will increasingly use mass-market digital currencies, such as Facebook’s planned Libra coin, to avoid sanctions. 

After the conference, the FBI said, Mr Griffith began working on plans to transfer digital assets between North and South Korea.

According to the complaint, he discussed his presentation over text with another person, and when asked what interest North Korea would have in cryptocurrency, replied: “probably avoiding sanctions . . . who knows”.

In a conversation with another person, he allegedly discussed sending cryptocurrency between North and South Korea, and when asked: “Isn’t that violating sanctions?”, he replied “it is”.

The US is charging Mr Griffith with violating the International Emergency Economic Powers Act, which carries a maximum prison sentence of 20 years.