U.S. Sanctions North Korea IT Workers and Crypto Schemes to Halt Weapons Funding

The U.S. Treasury has intensified its crackdown on North Korea’s illicit financial activities, sanctioning key entities and individuals involved in cryptocurrency schemes and IT worker operations. On July 25, 2025, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) targeted the Korea Sobaeksu Trading Company, a central entity in deploying North Korean IT workers abroad to generate revenue for the regime [1]. Three North Korean nationals—Kim Se Un, Jo Kyong Hun, and Myong Chol Min—were also sanctioned for their roles in these operations [2]. The Treasury emphasized that these actions aim to disrupt funding for North Korea’s weapons programs by curbing its access to foreign technology and financial systems [3].

The sanctions follow a broader initiative to counter North Korea’s cyber-enabled financial schemes. On July 12, the Treasury announced penalties against three North Korean officials for orchestrating remote IT worker scams, which often involve infiltrating U.S. tech firms under false pretenses [4]. These schemes, which include fraudulent employment arrangements and cryptocurrency-related fraud, have been described as critical to North Korea’s strategy for bypassing sanctions and sustaining its economy [5]. A prior case highlighted on July 25 involved the disruption of a network in Russia, where two companies were previously sanctioned in 2024 for employing North Korean IT workers [6].

The U.S. has also pursued legal action against intermediaries facilitating these schemes. On July 20, a federal court in Arizona sentenced Christina Marie Chapman, 50, to 102 months in prison for her role in a $17 million fraud scheme that enabled North Korean operatives to infiltrate over 300 U.S. cryptocurrency and tech companies. The case, spanning over a decade, exemplifies how North Korea leverages foreign intermediaries to obscure its operations [7]. The Treasury and Department of Justice have coordinated closely to dismantle these networks, with the latter noting that such schemes are among the largest of their kind [8].

The coordinated actions reflect a strategic focus on disrupting North Korea’s alternative revenue streams. By targeting both domestic and international enablers, the U.S. aims to weaken the regime’s ability to fund its military ambitions. The Korea Sobaeksu Trading Company had previously deployed IT workers to Vietnam and other countries, creating a transnational infrastructure that complicates enforcement efforts [9]. However, the repeated sanctions suggest a shift toward preemptive measures to isolate North Korea’s economic lifelines.

Analysts note that these steps align with longstanding U.S. policy priorities but underscore the evolving nature of North Korea’s financial tactics. The reliance on IT labor and cryptocurrency exploitation highlights the regime’s adaptation to global economic restrictions. While the immediate impact of sanctions is often limited by North Korea’s state-controlled economy, the cumulative effect of isolating key players could force the regime to seek alternative, potentially riskier strategies.

The Treasury’s announcements also emphasize the importance of international cooperation. By highlighting the Russian companies involved in the 2024 case, the U.S. signals its intent to pressure third countries that host or facilitate North Korean operations. This approach, however, faces challenges in countries where enforcement of U.S. sanctions is weak or non-existent.

Sources:

[1] [U.S. Treasury Press Release](https://home.treasury.gov/news/press-releases/sb0205)

[2] [Yahoo Finance](https://finance.yahoo.com/news/treasury-sanctions-north-koreans-involved-113829799.html)

[3] [The Record](https://therecord.media/us-sanctions-north-korean-officers-it-worker-scheme)

[4] [Korea Herald](https://www.koreaherald.com/article/10539664)

[5] [CSIS Analysis](https://www.csis.org/analysis/hidden-enablers-third-countries-north-koreas-cyber-playbook)

[6] [AINVEST](https://www.ainvest.com/news/woman-sentenced-8-5-years-17m-north-korean-scheme-infiltrating-300-firms-2507/)

[7] [U.S. Department of Justice](https://www.justice.gov/usao-dc/pr/arizona-woman-sentenced-17m-it-worker-fraud-scheme-illegally-generated-revenue-north)

[8] [U.S. Treasury Press Release](https://home.treasury.gov/news/press-releases/sb0205)

[9] [U.S. State Department](https://www.state.gov/releases/office-of-the-spokesperson/2025/07/united-states-disrupts-north-korea-revenue-generation-offering-rewards-of-up-to-15-million)