Here’s a hint: if you’re trying to teach North Korea how to use cryptocurrency to circumvent sanctions, don’t post your visa on Twitter. Especially if the US State Department has warned you about it.
Virgil Griffith, the Ethereum Foundation’s Special Projects Lead, was arrested for precisely that, the Justice Department (DoJ) announced on November 29. Griffith, a Singapore resident and US citizen, was arrested at Los Angeles International Airport on November 28th – Thanksgiving Day.
Would a man with a haircut like this teach Kim Jong-Un about crypto smuggling? (via medium)
North Korea has hacked $ 2 billion worth of cryptocurrency exchanges in the past two years, according to a UN report. This includes the theft of $ 534 million in January 2018 from the Japanese exchange Coincheck.
The Democratic People’s Republic of Korea has been accused of using these funds to further develop nuclear weapons.
Griffith’s March 20, 2019 paper, “Ethereum Is Literally Breakthrough Technology” is one of four described on the Foundation’s Ethereum.org/learn website as “great starting points” for people new to Ethereum.
Vitalik Buterin’s video “Decentralizing Everything” is the first of these links.
The DoJ said Griffith has a PhD in Computing and Neural Systems from the California Institute of Technology
Twenty years in prison is also groundbreaking (via the Ethereum Foundation website).
An illegal target
“Although Griffith received warnings not to leave, he reportedly traveled to one of the United States’ main adversaries, North Korea, where he taught his audience how to use blockchain technology to evade sanctions,” said John Demers, assistant attorney general for national security, in a statement. “With this complaint, we begin the process of seeking justice for such behavior.”
The chief crypto thief Kim Jong-Un (via Pixabay).
Griffith faces up to 20 years in prison if convicted of conspiracy in violation of the International Emergency Economic Powers Act (IEEPA) and Executive Order 13466. These prohibit the export of goods, services or technology to the DPRK without a license from the Ministry of Finance.
The indictment alleges Griffith visited the DPRK in April to attend the Blockchain and Cryptocurrency Conference in Pyongyang from April 26-27.
Intentions versus actions
FBI Special Agent Brandon Cavanaugh said in the indictment that Griffith and “other attendees discussed how the DPRK could use blockchain and cryptocurrency technology to launder money and evade sanctions.”
Regardless of US Attorney Berman’s characterization of Griffith’s behavior at the conference, once you read the indictment, his intentions become somewhat vague.
Dogecoin Doge would hang out with a bad person (via Twitter).
For one thing, Griffith’s presentation was titled “Blockchain and Peace,” and the issues Cavanaugh described are very simple.
In the current presentation, Griffith discussed “how blockchain technology, including a ‘smart contract’, could be used to benefit the DPRK,” said Cavanaugh. “Griffith identified several participants in the DPRK Cryptocurrency Conference who asked more specific questions to Griffith during his presentation and sparked discussions on technical topics such as ‘Proof of Work’ versus ‘Proof of Stake’.”
None of them are directly about circumventing sanctions. But both the IEEPA and the Executive Ordinance, which has been in force since 2008, are very broad.
Cavanaugh also said that Griffith admitted in a November 12 interview that his presentation was “a ‘non-zero tech transfer’, that is, a transfer of technical knowledge from Griffith to other participants”.
SMS are forever
Griffith “agreed in writing to his cell phone being searched,” added the agent.
That search, Cavanaugh said, showed that Griffith knew the DPRK’s interest in cryptocurrencies was threatening.
He said the search revealed text messages on November 26, 2018 with an unnamed person who asked Griffith, “In sum and substance, what interest North Korea has in cryptocurrency. Griffith replied in a concise and factual manner: “Probably to avoid sanctions … who knows.”
An (alleged) smoking weapon (via the Ministry of Justice).
This was followed by an Aug. 6 text message with another person in which Griffith said he had to send an unnamed amount of cryptocurrency between North and South Korea, Cavanaugh noted in the indictment. “In response to this, Individual-2 asked in sum and substance: ‘Doesn’t that violate the sanctions?’ Griffith replied, ‘It is,’ ”Cavanaugh said.
An even more (alleged) smoking weapon (via the Ministry of Justice).