Unsealed criminal complaint
The US Attorney for the SDNY, together with the FBI yesterday announced the arrest of Virgil Griffith, a cryptocurrency advisor, in connection with technical services he allegedly provided to educate the Democratic People’s Republic of Korea (“North Korea”) on sanctions avoidance and money laundering. Griffith was the subject of a criminal complaint filed on November 21, 2019, that was unsealed upon his arrest.
The US Attorney General alleges that Griffith provided highly technical information knowing that it could be used to help North Korea launder money and evade sanctions, and in so doing, put the US financial system at risk. Part of that technical education allegedly took place at something called the Pyongyang Blockchain and Cryptocurrency Conference that was held in North Korea.
He was denied permission to travel to Korea but went anyway
The sanctions in respect of North Korea are in respect of concerns over the proliferation of weapons of mass destruction and terrorism. The unsealed criminal complaint says that it is unlawful for US citizens to travel to North Korea, and despite that, Griffith went there after being denied permission by the US government to do so, and outright disobeyed instructions from the US State Department.
It is alleged that Griffith informed attendees at the Conference that Blockchain and digital currencies could be used to achieve independence from the financial system and circumvent it, including discussions in respect of mining digital currencies.
Allegedly he acknowledged sanctions avoidance
The FBI extracted his cell phone information and therein, he is alleged to have said that the interest of North Korea in his expertise was probably sanctions avoidance and later, sent digital currencies to North Korea despite sanctions in place.
Griffith was a math and science whiz, who, according to this article, considers himself a super hero in the computer sphere, who has invented a number of technical firsts.
Blockchain used to defeat the rule of law
The concern of digital currencies and mining being used for sanctions avoidance is not new but has been growing recently. For example, there are concerns that Iran (through mining) and a self-proclaimed state in the Ukraine (the PRIZM coin owned by Aleksei Muratov), may be engaged in sanctions avoidance, as well as Venezuela (the Petro coin). The Petro coin uses NEM, which is supported in Canada in terms of transactions by a Vancouver digital currency exchange, which would allow sanctioned transactions to be cashed out in Canada. Venezuela said it sold $5 billion of the Petro coin around the world and then its ICO website went dark and remains offline.
The US government has, on several occasions, issued guidance and expressed concerns to the digital currency ecosystem about the use of digital currencies to circumvent the rule of law, including recent FinCEN advisory.