By Josh Smith

SEOUL (Reuters) – The U.S. Justice Department charged two Chinese nationals with laundering more than $100 million in cryptocurrency on behalf of North Korea, in court filings that detail Pyongyang’s use of hackers to circumvent sanctions.

According to an indictment filed in federal court in Washington, D.C., and unsealed on Monday, the two Chinese allegedly laundered cryptocurrency stolen by North Korean hackers between December 2017 and April 2019, helping to hide the stolen currency from police.

“These defendants allegedly laundered over a hundred million dollars worth of stolen cryptocurrency to obscure transactions for the benefit of actors based in North Korea,” Assistant Attorney General Brian Benczkowski said in a statement.

In a related civil forfeiture complaint also unsealed on Monday, Justice Department lawyers said they had seized some of the roughly $250 million that they said North Koreans hackers stole from a virtual currency exchange in 2018.

Those funds were then laundered through hundreds of automated transactions designed to prevent investigators from tracing the funds, the complaint alleged.

At least some of those funds were eventually used to help pay for the infrastructure in North Korea used to launch cyberattacks, according to the documents.

The same North Korean hackers were linked to a November 2019 attack on a South Korean virtual exchange that netted the hackers more than $48 million in stolen cryptocurrency.

“The hacking of virtual currency exchanges and related money laundering for the benefit of North Korean actors poses a grave threat to the security and integrity of the global financial system,” U.S. Attorney Timothy Shea of the District of Columbia, said in the statement.

The United Nations Security Council has imposed sanctions on North Korea since 2006 in a bid to choke off funding for Pyongyang’s nuclear and ballistic missile programs.

North Korea has generated an estimated $2 billion for its weapons of mass destruction programs using “widespread and increasingly sophisticated” cyber attacks to steal from banks and cryptocurrency exchanges, a confidential United Nations report said last year.

The U.N. experts said North Korea’s attacks against cryptocurrency exchanges allowed it “to generate income in ways that are harder to trace and subject to less government oversight and regulation than the traditional banking sector.”

At the time, North Korea denied those U.N. allegations, calling them a “fabrication” aimed at tarnishing the country’s image.

The United States last year charged American digital currency expert Virgil Griffith with helping North Korea use cryptocurrency and blockchain technology to evade U.S. sanctions, after he attended a 2019 North Korean cryptocurrency conference.

Prosecutors said he and other conference attendees had discussed how cryptocurrency technology could be used by Pyongyang to launder money and evade sanctions.

Griffith’s lawyer has rejected the charges.

(Reporting by Josh Smith; Editing by Michael Perry)