March 22, 2024

ICYMI: At Hearing, Warren Warns of Threats Posed by North Korea’s Crypto-Funded Weapons Program and Pig-Butchering Scams to National Security

Senator Warren: “(Crypto) is helping rogue states. It’s helping terrorists. It's helping criminal organizations fund their operations on a scale like we have never seen before.”

General Aquilino: “I have over 200 fake websites put out on me every month, of which many are soliciting dollars (through crypto) from people who can be fooled.”

Video of Exchange (YouTube)

Washington, D.C. — Yesterday, at a hearing of the Senate Committee on Armed Services, U.S. Senator Elizabeth Warren (D-Mass.) questioned Admiral John C. Aquilino, Commander of the U.S. Indo-Pacific Command, and General Paul J. LaCamera, Commander of the the UN Command, ROK/US Combined Forces Command and United States Forces Korea, on the national security risks posed by North Korea’s crypto-funded weapons programs and crypto’s use in ‘pig butchering’ scams — a type of scam in which fraudsters target individuals, gain their trust, and then manipulate them into phony investments through cryptocurrency before disappearing with the funds.

Senator Warren highlighted North Korea’s use of crypto to fund their nuclear weapons program. In 2022, North Korea stole $1.7 billion worth of crypto, enough to pay for more than 56 ICBM tests. 

General LaCamera then discussed his own experience with ‘pig butchering’ crypto scams which have harmed over 40,000 Americans and cost them over $3.5 billion last year alone. 

Admiral Aquilino and General LaCamera agreed making it more difficult for rogue states and criminals to use crypto to steal and launder funds  would strengthen international security. 

Senator Warren also urged Admiral Aquilino to provide Congress the information required by law to justify his “wish lists,” and emphasized unfunded priorities lists are a game used to boost the Pentagon’s budget  and shovel money to defense contractors. 

Transcript: To receive testimony on the posture of United States Indo-Pacific Command and United States Forces Korea in review of the Defense Authorization Request for Fiscal Year 2025 and the Future Years Defense Program
U.S. Senate Committee on Armed Services
Thursday, March 21, 2024 

Senator Warren: Thank you, Mr. Chairman. 

So, you two are no strangers to the threat that cryptocurrency poses to our national security. Both of you have previously testified North Korea is using crypto to steal money, evade sanctions, and to fund its nuclear weapons program. 

In 2022 alone, North Korea stole at least $1.7 billion worth of crypto. That is about 6% of North Korea's entire economy, and as much as a quarter of their annual defense budget. 

You know, that is a lot of weapons that North Korea is able to build and fire-off paid for by crypto crime. 

In fact, let's put this in terms of missiles. Admiral Aquilino, help me out here. Do you know how many intercontinental ballistic missiles North Korea can test with $1.7 billion?

Admiral John C. Aquilino, USN, Commander, United States Indo-Pacific Command: Senator, I don't have that specific calculation. But it's more than we would like. 

Senator Warren: It's more than we would like. I like that. But let's do a little math just because it's fun to look at these numbers and eye-opening. 

So, it costs North Korea about $30 million to test an ICBM. These are long range missiles that North Korea desperately wants because it could give them the ability to target the U.S. mainland. At $30 million to test, $1.7 billion is enough to pay for more than 56 ICBM tests. 

So, does that surprise you, admiral? 

Admiral Aquilino: It does not. 

Senator Warren: Yeah. So, North Korea is stealing about 56 ICBMs worth of crypto in a single year. And the threat is not letting up. Just last week, in the span of two days, North Korea laundered more than $23 million worth of crypto that it stole. 

Now, North Korea isn't the only one using crypto to threaten the U.S. and its interests. Dangerous actors all over the world are using crypto to steal and to finance their illegal activities. 

One example: Pig butchering. 

Pig butchering is a crypto scam where scammers, often based in China or Southeast Asia, use fake identities to lure people into weeks and even months-long online relationships, fattening them up like hogs for slaughter before tricking them into sending crypto. 

General LaCamera, I think you have some experience with this crypto scam. Would you be willing to talk about it for just a minute?

General Paul J. LaCamera, USA, Commander, United Nations Command/Combined Forces Command/United States Forces Korea: Thanks, Senator. 

Not necessarily with crypto scamming me personally, but I do have some experience with being swatted and the number of social media impersonations that are out there. But, I have seen that my face has been used for scamming. 

Senator Warren: Yeah, to try to lure people in and think they're dealing with you on this. 

You know, you have lots of company on this. Last year, more than 40,000 people in the United States lost more than $3.5 billion dollars in pig butchering crypto scams that we know of. 

Now, pig butchering is just one scam. There are many more. A recent study found that these criminal gangs have stolen and laundered more than $75 billion dollars in crypto in just the last four years. 

So, General LaCamera, would making it more difficult for criminals and rogue states to use crypto to steal and to launder funds strengthen our national security? 

General LaCamera: It would be a qualified yes. But, yes.

Senator Warren: Yes. Okay. I'll take yes. Admiral Aquilino, do you agree with that?

Admiral Aquilino: I do, senator. I have over 200 fake websites put out on me every month, of which many are soliciting dollars from people who can be fooled.

Senator Warren: Yeah. Yeah. You know, crypto is the way this stuff is financed. And it's helping rogue states. It's helping terrorists. It's helping criminal organizations fund their operations on a scale like we have never seen before. 

I've got a bipartisan bill, Republicans and Democrats, with 20 senators that would put a stop to it. I think it is time to pass this bill. 

One last note. I'm almost out of time, but General Aquilino, your command failed to provide this committee with the information required by law to justify your wish lists. I remain deeply concerned that unfunded priorities lists are distracting us from making the most of our resources and focusing on grabbing more money for defense contractors. So, we need to get that cleaned up. 

Thank you, Mr. Chairman.