North Korea is accused of utilizing the power of cryptocurrency to circumvent international sanctions, particularly using cryptocurrency as a payment system to transact money worldwide.
Lourdes Miranda and Ross Delston, experts on international money laundering and intelligence, say in a joint statement: “International criminals everywhere prefer cryptocurrencies and the DPRK is no exception. Cryptocurrencies have the added advantage to the DPRK of giving them more ways to circumvent US sanctions. They can do so by using multiple international exchangers, mixing and shifting services – mirroring the money laundering cycle – to exploit international financial institutions that have correspondent banking relationships with the United States.”
The Democratic People’s Republic of Korea (DPRK), also known as North Korea, has had heavy international sanctions imposed by them by the United Nations Security Council, in response to North Korea’s nuclear weapons program. These are some of the heaviest sanctions in the world, and amount to a full blockade on international finance and trade between North Korea and the rest of the world.
Miranda and Delston propose that North Korea might have gone as far as creating their own cryptocurrency in secret, specifically so they could delete and manipulate blockchain records after a transaction occurs, to make it look like a transaction never happened. If what Miranda and Delston is saying is true, then one of the cryptocurrencies that is already out there is controlled by North Korea, but this is highly speculative and there’s no evidence to back it.
The experts point out how Bitcoin and other cryptos can be effectively used to circumvent international sanctions. Since crypto is worldwide, North Korea can open accounts with crypto exchanges and wallets that don’t require identity verification, and transfer crypto between these accounts to confuse the trail. Further, North Korea could convert into different cryptos along the way to really obfuscate the trail.
Additionally, Miranda and Delston propose that North Korea uses professional mixing services to make sure any clear digital trail back to North Korea is eliminated. One thing they fail to mention is privacy coins like Monero, which are extremely anonymous even without third-party mixing. Monero and other privacy coins like Zcash are an obvious choice for North Korea.
The ultimate goal is for North Korea to send the completely anonymous crypto into an exchange where it can be converted to fiat. This would allow it to send and receive fiat despite international sanctions. This is not only important for North Korea’s trade with the rest of the world, but also for its crypto mining operation. It is speculated that the North Korean government has a large crypto mining farm, and they need to properly launder the crypto and change it into fiat for it to be a sustainable and worthwhile operation.
Essentially, even though North Korea’s crypto use is considered criminal by the rest of the world, this is actually what Bitcoin was originally built to do, among other purposes. Bitcoin and most cryptos are designed in a decentralized fashion, in order to provide worldwide financial freedom regardless of government regulations. North Korea’s use of crypto to defeat international sanctions is an example of just how powerful crypto is as a decentralized financial system.
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