Cambodian Payments Firm Involved in Laundering $150,000 in Crypto for North Korean Hackers

Cambodian Payments Firm Involved in Laundering $150,000 in Crypto for North Korean Hackers

Cambodian currency exchange and payments company Huione Pay has been implicated in laundering over $150,000 in cryptocurrency stolen by the notorious North Korean hacking group, Lazarus.

A Reuters report on Monday revealed that Huione Pay, based in Phnom Penh, received the illicit funds between June last year and February this year, according to blockchain data. The stolen cryptocurrency was linked to hacks of three crypto firms carried out by Lazarus in June and July last year.

Huione Pay Claims Ignorance of Stolen Funds

In a statement, Huione Pay claimed it was unaware of receiving funds indirectly from the hacks. Despite the company’s claim, the National Bank of Cambodia (NBC) emphasized that payments firms in the country are prohibited from dealing in cryptocurrencies and digital assets. This ban, imposed in 2018, aims to mitigate risks associated with cryptocurrency volatility, cybercrime, and potential money laundering and terrorism financing. The NBC indicated it might take corrective action against Huione Pay, though no specific measures were mentioned.

Despite the anonymity often associated with cryptocurrency transactions, blockchain’s public ledger allows for tracking movements from wallet to wallet. U.S.-based blockchain analysis firm TRM Labs reported that Huione Pay was among several payment platforms and over-the-counter (OTC) brokers that received most of the crypto stolen in the Atomic Wallet hack. OTC brokers facilitate private crypto transactions, offering greater privacy than standard exchanges.

Lazarus Group’s Sophisticated Laundering Operation

TRM Labs disclosed that the hackers employed a sophisticated laundering operation, converting the stolen cryptocurrency into various forms, including tether (USDT), a stablecoin pegged to the U.S. dollar. They utilized the Tron blockchain, known for its speed and low transaction costs, to carry out these conversions. Most of the laundered funds were sent to exchanges, services, and OTC brokers, including Huione Pay.

Scam Operations on Huione Guarantee

Huione Guarantee, an online marketplace operated by the Cambodian conglomerate Huione Group, has been involved in facilitating online scams in Southeast Asia. The platform has facilitated transactions exceeding $11 billion, with a significant portion of these funds linked to money laundering and cyber scams, according to a recent research report by Elliptic. Using blockchain analytics, Elliptic quantified the cryptocurrency transactions on the Huione Guarantee, which primarily operates in Chinese and involves numerous instant messaging app channels managed by separate merchants offering services fundamental to cyber scams.

Crypto Market Resilience Amidst Scams

Despite these challenges, the cryptocurrency market has shown resilience, achieving a record recovery rate of 77% for stolen funds in the second quarter of 2024. According to Hacken’s Web3 Security Report Q2 2024, $347.4 million of the stolen crypto funds were successfully recovered or frozen out of the total $512.9 million lost. “For the second consecutive quarter, the silver lining amid the alarming rate of theft in crypto is the amount of funds recovered,” the report stated.

The involvement of Huione Pay in laundering stolen cryptocurrency highlights the ongoing challenges of cybercrime and money laundering within the crypto space, underscoring the need for robust regulatory measures and vigilant monitoring to protect the integrity of the financial system.

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