Crypto Enthusiast Sentenced to 5 Years for North Korea Trip

Virgil Griffith, a computer programmer known for his contributions to Wikipedia and the digital currency Ethereum, was sentenced to 63 months in prison on Tuesday for speaking at a cryptocurrency conference in North Korea.

To him, the trip in April 2019 was squarely within his rights as a technologist spreading the crypto gospel and getting others to join in on mining and trading computerized money.

But the feds saw it as an American teaching the militant thugs in dictator Kim Jong-un’s hellish Democratic People's Republic of Korea how to dodge economic sanctions and stash cash to build nuclear missiles that threaten the world.

‘We’re a Cult’: Inside Bitcoin’s Shameless Hypefest

At a federal court in New York City, U.S. District Judge P. Kevin Castel handed down the stiff five-year sentence—as well as a $100,000 fine—marking an end to an FBI investigation that, at times, seemed like a heavy-handed crackdown.

But to North Korea watchers aware of the lengths Kim Jong-un’s henchmen will go to to learn about cryptocurrency and blockchain in order to skirt sanctions and boost the country’s nuclear weapons program, the spread of knowledge on cryptocurrency seems dangerous.

“North Korea’s obsession and dependency on cryptocurrency has no bounds, and they’ll be quick to take advantage of a misjudgement made by otherwise smart and capable individuals,” Vikram Thakur, a technical director at Symantec who has been tracking financially motivated North Korean hacking for years, told The Daily Beast.

Under the bite of harsh international sanctions, North Korea has been hacking cryptocurrency-related entities for years to generate revenue for the regime. From 2019 to 2020 alone, Kim’s hackers stole $316.4 million worth of virtual assets to fund North Korea’s weapons of mass destruction and ballistic missile programs, according to a United Nations investigation.

The technologist initially asserted his innocence, but he decided to plead guilty on the eve of his criminal trial last fall. During sentencing on Tuesday, Griffith, now 39, said he “genuinely, arrogantly, and erroneously” thought he knew better.

“Everyone warned me. This was a terrible idea,” Griffith said, citing his own “fixation” with North Korea.

Kimberly Jane Ravener, a federal prosecutor with the Southern District of New York, said his actions “struck at the heart of the United States’ sanctions regime,” and they pointed out several text messages where Griffith made clear his intention was to teach North Korea how to dodge restrictions.

The Mysterious ‘Crypto King’ Who Stole $215M in Bitcoin and Wound Up Dead

The judge appeared particularly incensed by a photo of Griffith wearing a dark olive green, North Korean military tunic next to a white board where he had drawn a happy face and the words “no sanctions” and “yay.”

Judge Castel said there is “a narrative that Virgil Griffith is a kind and gentle man who merely wanted to speak at a conference… and was persecuted for his actions.”

“Those are not the facts,” Castel said. “That’s not what happened. Virgil Griffith hoped to come home… a crypto hero.”

According to investigators, Griffith wanted to travel to the Pyongyang Blockchain and Cryptocurrency Conference in the spring of 2019 but was told not to by the U.S. State Department. Instead of staying put, Griffith traveled to China and made his way into the neighboring authoritarian country anyway. While there, he “participated in discussions regarding using cryptocurrency technologies to evade sanctions and launder money.” Special agents at the FBI saw that as a clear violation of the International Emergency Economic Powers Act.

According to his lawyers, after his North Korean speaking engagement, Griffith actually went straight to the U.S. embassy in Singapore, where he was residing at the time, to tell them all about the experience. He also chose to meet with the FBI in Puerto Rico and San Francisco.

But after extensive talks, the feds instead surprised the technologist by arresting him at Los Angeles International Airport on Thanksgiving Day 2019, while Griffith was boarding a flight to Baltimore to spend the holiday with his parents and sister.

He was indicted months later on a single count of violating presidential executive orders aimed at blocking North Korea from the international banking system as punishment for its repeated threats to nuke the United States.

The arrest immediately generated criticism, as the exceedingly eccentric and devoted community of cryptocurrency enthusiasts cast the prosecution as a crackdown on free speech.

Meanwhile, the federal government played right into that by shrouding the case in secrecy. So many court files were kept sealed that journalist Matthew Russell Lee, who runs the publication Inner City Press, asked the judge to reconsider in a letter that noted, “The sealings and withholding here are unacceptable, and go beyond those requested even in the Central Intelligence Agency trial” of accused Wikileaks leaker Joshua Adam Schulte.

As the case proceeded, Griffith’s attorneys maintained that his travel was “a goodwill speaking trip.”

During his chats with FBI agents, Griffith came clean and offered to help the feds explore his North Korean contacts and activities, according to a source close to Griffith. This source described at length Griffith’s willingness to cooperate with the American intelligence agencies and the potential to become something of a spy asset. Those hopes were dashed when the Justice Department came down hard on him.

On Tuesday, Griffith’s defense lawyers pleaded with the judge to essentially free him now, given his already harsh experience in New York City’s federal jails, where conditions have been so horrendous that a top DOJ official ordered the Manhattan facility closed and a Brooklyn facility has been mired in human rights lawsuits. Defense attorney Brian Klein said Griffith was forced to use his Brooklyn Metropolitan Detention Center jail cell’s sink as a toilet during the recent Christmas season, came down with COVID-19 for three weeks, and was never allowed to see his family.

"The 10 months Mr. Griffith has spent… should count for 20 months," Klein said.

His defense team also noted that in similar cases where people visited sanctioned countries to speak at business and academic conferences, Americans typically got off with a cautionary letter from the Treasury Department’s Office of Foreign Assets Control.

But federal prosecutors countered that Griffith did more than appear as a guest for a single event, citing his months-long conversations with co-conspirators where he detailed his willingness to help the brutal North Korean regime.

In one text message, Griffith explained the value of setting up a computer “node” in North Korea that would allow the country to take part in the computer network that processes transactions of the digital currency Ethereum. “It’ll make it possible to avoid sanctions on money transfers,” he wrote in another text.

“You have to look at the text messages,” the judge told those in the courtroom. “He has to do a lot of work on himself.”

North Korea, the most sanctioned country on the planet, has increasingly turned to cryptocurrency cyber crime in order to raise funds and sidestep the formal financial system from which it remains exiled.

In 2021, it stole an astounding $395 million worth of cryptocurrencies—or about 2.4 percent of its annual gross domestic product that year—according to an analysis provided by the blockchain monitoring firm, Chainalysis.

Cybersecurity firms believe that North Korea created a dedicated cryptocurrency theft campaign from “Lazarus Group,” a group of hackers linked to Pyongyang’s intelligence services. The crypto thieves, dubbed “Cryptocore,” has spent the past few years targeting cryptocurrency exchanges in Europe, the U.S., Israel, and Asia, and pilfered “millions of dollars’ worth of cryptocurrency wallets,” according to a report by the cybersecurity firm ClearSky.

Read more at The Daily Beast.

Get the Daily Beast's biggest scoops and scandals delivered right to your inbox. Sign up now.

Stay informed and gain unlimited access to the Daily Beast's unmatched reporting. Subscribe now.