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While cryptocurrencies are rapidly adopted in democratic countries by a growing number of people, organizations and governments, it seems that digital currencies are employed as well by the most ostracized and authoritarian regimes in the world – for very different reasons.
According to analysis of two distinguished American intelligence experts, the North Korean dictatorial regime has been utilizing cryptocurrencies and their unique decentralized characteristics to bypass the heavy sanctions imposed on the autocratic state. They also added that via cryptocurrencies, the Democratic People’s Republic of Korea (any connection to democratic is purely coincidental) even manages to obtain access to the American financial system.
International criminals everywhere prefer crypto-currencies and the DPRK is no exception. Crypto-currencies 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 two independent experts, Lourdes Miranda and Ross Delston, speculate that it is probable that the North Koreans not only buy/sell cryptocurrency in order to outflank the sanctions, but might also virtually mint their own digital currency. The main advantage of creating a cryptocurrency is control: if the virtual asset’s creators hold administrator privileges over the different aspects of the cryptocurrency, they can alter its blockchain data to conceal illicit transactions. Miranda and Delston further conjecture that the North Korean regime also generates a bunch of other crypto-related products and services under the guise of a different, Western-friendly, state to launder money.
Another theorized method to mask the root source of the funds is a switch and conversion between different cryptocurrencies.
Once DPRK split its Bitcoin using multiple international mixing services, it could use shifting services to convert its Bitcoin into another popular crypto-currency such as Ethereum and/or Litecoin to break the linear pattern of transactions on the blockchain to obscure the origin of funds.
Lastly, the North Koreans use fake European accounts in crypto exchanges to convert the digital currency to fiat currency such as the dollar.
According to a growing number of accounts, North Korea has been dabbling in cryptocurrency for quite some time. Among other reports, the North Korean isolated regime might have obtained under the table as much as 11,000 Bitcoins; additionally, the regime have a bizarre plan to host a global crypto conference in October, although it’s unclear who will actually participate in such an event in the most secluded and tyrannical nation on the planet.