Warren, Kaine, Van Hollen Call on Treasury to Crack Down on North Korea Crypto Threats
North Korea Uses Crypto to Steal and Launder Billions to Fund Illicit Weapons Program
Washington, D.C. – United States Senators Elizabeth Warren (D-Mass), a member of the Senate Armed Services and Banking, Housing, and Urban Affairs Committees, Tim Kaine (D-Va.), a member of the Senate Armed Services and Foreign Relations Committees, and Chris Van Hollen (D-Md.), a member of the Senate Banking, Housing, and Urban Affairs and Foreign Relations Committees, sent a letter to Brian Nelson, Under Secretary for Terrorism and Financial Intelligence at the U.S. Department of the Treasury (Treasury) and National Security Advisor Jake Sullivan, expressing concerns about North Korea’s use of crypto to circumvent international sanctions and fund its illegal weapons programs. The senators are asking Treasury to provide details about its plans to address North Korea’s use of crypto to evade sanctions and fill its coffers.
“According to recent comments by White House Deputy National Security Advisor for Cyber and Emerging Technology Anne Neuberger, ‘(a)bout half of North Korea’s missile program has been funded by cyberattacks and cryptocurrency theft,’ and the country’s misuse of these tactics is increasing. Given the pressing nature of this threat, we ask the Administration to provide details on its plan to stop North Korea and its ‘digital bank-robbing army’ from using digital assets ‘to evade harsh sanctions and support its ambitions to project geopolitical power through nuclear weapons and ballistic missiles,’” wrote the senators.
Treasury, the Department of Justice, and other national security experts have long noted North Korea’s dependence on attacks on crypto exchanges and users as well as mining crypto to skirt international sanctions and raise money for its illicit weapons programs, including for weapons of mass destruction. Research from blockchain analytics firms shows that of the $3.8 billion of cryptocurrency stolen last year, $1.7 billion – about 44 percent – was stolen by North Korea-backed hackers, four times the country’s previous record for crypto theft from 2021. Over the past five years, North Korea has raised over $3 billion from crypto heists.
A recent report found that since 2018, when North Korean hackers began large-scale crypto attacks, the country’s “missile launch attempts and successes have mushroomed, with more than 42 successes observed in 2022.” And in May 2023, during a hearing of the Senate Armed Services Committee, when asked about the role crypto plays in the development of North Korea’s nuclear arsenal, Lieutenant General Scott Berrier, the Director of the Defense Intelligence Agency, said, “as North Korea steals that money and then tries to turn it into a legal tender, . . . (t)hat is helping them build their nuclear capacity.” Director of National Intelligence Avril Haines added that beyond funding its nuclear program, North Korea’s cyber-and crypto-crime “also pos(es) a cyber-threat to important networks. And that’s part of what it is that we see as a national security threat.”
“That the missile ‘test buildup by Kim Jong Un’s reclusive regime has occurred at the same time as a concerning upswing in crypto heists’ underscores the severity of the threat. Treasury must act quickly and decisively to crack down on illicit crypto activity and protect our national security,” concluded the senators.
Given these serious concerns, Senators Warren, Kaine, and Van Hollen are asking Treasury to answer a set of questions about its plans to address the serious national security concerns posed by North Korea’s dependence on crypto by August 16, 2023.
Senator Warren has led bipartisan efforts to rein in crypto to protect national security, the financial system, and consumers:
- In July 2023, Senators Warren and Roger Marshall (R-Kan.), along with Senators Joe Manchin (D-W.Va.) and Lindsey Graham (R-S.C.), reintroduced the Digital Asset Anti-Money Laundering Act, legislation that would mitigate the risks that digital assets pose to national security by closing loopholes and bringing the digital asset ecosystem into greater compliance with the anti-money laundering and countering the financing of terrorism (AML/CFT) frameworks governing the greater financial system.
- In July 2023, at a hearing of the Senate Armed Services Committee, Senator Warren warned about the national security risks of rogue states using crypto to evade sanctions and fund their weapons programs, spying, and cyberattacks – calling out North Korea for stealing over $3 billion in crypto over the past 5 years, and using proceeds to fund its illegal nuclear weapons program,
- In June 2023, Senators Warren and Van Hollen sent a letter to Attorney General Merrick Garland asking the Department of Justice to investigate the crypto exchanges Binance and Binance.US for potentially making a series of false statements to Congress.
- In May 2023, a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called out crypto’s role in fueling the fentanyl crisis and announced she will reintroduce her bipartisan Digital Asset Anti-Money Laundering Act, a bill that would close loopholes in anti-money laundering rules, cutting off drug suppliers and cartels from using crypto to facilitate their illegal business.
- In May 2023, at a hearing of the Senate Armed Services Committee, Senator Warren questioned senior intelligence officials about crypto’s threats to national security as the method of choice for countries to evade sanctions and fund weapons programs, support spying, and promote cyber attacks.
- In February 2023, at a hearing of the Senate Committee on Banking, Housing, and Urban Affairs, Senator Warren raised concerns that key parts of the crypto industry are not subject to the same money laundering laws that cover other financial organizations, allowing financial criminals to use crypto to launder billions.
- In December 2022, Senators Warren and Marshall introduced the Digital Asset Anti-Money Laundering Act of 2022, bipartisan legislation that would mitigate the risks that cryptocurrency and other digital assets pose to the United States’s national security by closing loopholes in the existing anti-money laundering and countering of the financing of terrorism (AML/CFT) framework and bring the digital asset ecosystem into greater compliance with the rules that govern the rest of the financial system.
- In December 2022, Senators Warren and Tina Smith (D-Minn.) sent letters to three key banking regulators to raise concerns about the ties between the banking industry and crypto firms.
- In December 2022, Senators Warren, Marshall, and John Kennedy (R-La.) wrote to Silvergate, the bank that reportedly facilitated the transfer of FTX customer funds to Alameda Research, seeking answers about the bank’s role in the loss of billions of dollars in customer funds.
- In November 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called on regulators to keep crypto out of the banking system following FTX’s collapse.
- In November 2022, Senators Warren and Sheldon Whitehouse (D-R.I.) sent a letter to the Department of Justice requesting personal accountability for former FTX CEO Sam-Bankman Fried and any complicit FTX executives for wrongdoing following the exchange’s collapse.
- In November 2022, Senator Warren published an op-ed in the Wall Street Journal urging federal regulators to use their expansive authorities to crack down on crypto fraud and hold the industry to the same basic standards as other financial activities.
- In November 2022, Senators Warren and Dick Durbin (D-Ill.), sent a letter to Sam Bankman-Fried, founder and former CEO of FTX Trading Ltd. (FTX), and John Jay Ray III, the newly appointed CEO of FTX, seeking information on the reported misuse of billions of dollars of customer funds and other disturbing allegations that continue to emerge about the company’s fraudulent and illicit practices.
- In October 2022, Senators Warren and Whitehouse and Representatives Alexandria Ocasio-Cortez (D-N.Y.), Jesús “Chuy” García (D-Ill.), and Rashida Tlaib (D-Mich.) sent a letter to the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, the U.S. Department of Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Consumer Financial Protection Bureau, seeking information about the steps each regulator is taking to stop the revolving door between financial regulatory agencies and the cryptocurrency industry.
- In September 2022, Senator Warren sent a letter to Treasury Secretary Janet Yellen calling on the Treasury Department and the Financial Stability Oversight Council to build a strong regulatory framework for the crypto market.
- In July 2022, Senator Warren and her colleagues released the findings from an investigation into seven large cryptomining companies – showing extraordinarily high energy use and climate impacts from cryptomining – and called on the Environmental Protection Agency and Department of Energy to take action.
- In May 2022, Senators Warren and Smith sent a letter to Fidelity, asking the company to explain its decision to allow Bitcoin investments for 401(k) plans, despite the Department of Labor’s warnings about 401(k) crypto investments.
- In March 2022, Senator Warren, Senate Armed Services Committee Chair Jack Reed (D-R.I.), Senate Intelligence Committee Chair Mark Warner (D-Va.), and Senate Defense Appropriations Subcommittee Chair Jon Tester (D-Mt.) introduced the Digital Asset Sanctions Compliance Enhancement Act to ensure that Vladimir Putin and Russian elites can’t use digital assets to undermine the international community’s economic sanctions against Russia following its invasion of Ukraine.
- In March 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren highlighted the various cryptocurrency tools that could make it easier for sanctioned individuals to hide their wealth and lessen the impact of Russian sanctions.
- In March 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren warned that cryptocurrency may allow Russia to dodge sanctions and urged stronger regulation of the crypto market to ensure that countries, drug traffickers, cyber criminals, and tax cheats can’t evade economic pain.
- In March 2022, Senators Warren, Warner, Reed, and Sherrod Brown (D-Ohio), Chair of the Senate Banking, Housing, and Urban Affairs Committee, sent a letter to Treasury Secretary Janet Yellen, asking about the Treasury Department’s plans to enforce sanctions-compliance guidance for the cryptocurrency industry to ensure that economic sanctions remain an effective tool for achieving foreign policy goals.
- In December 2021, during a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren raised concerns over the growing risks presented by stablecoins.
- In September 2021, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called on regulators to step up to address crypto's regulatory gaps and ensure an inclusive financial system.
- In July 2021, Senator Warren sent a letter to SEC Chair Gary Gensler requesting information about the agency's authority to regulate cryptocurrency exchanges and protect consumers from risks posed by the highly volatile cryptocurrency market.
- In June 2021, chairing a hearing of the Senate Banking, Housing, and Urban Affairs Committee's Subcommittee on Economic Policy, Senator Warren delivered remarks on the opportunities and risks that digital currencies present.
- In a June 2021 interview, Senator Warren called the market for crypto the “wild west,” and said digital currency is “not a good way to buy and sell things and not a good investment and an environmental disaster.”
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