N Korea peddles illicit gambling sites to South’s criminal ring

A North Korean information technology group has created illegal online gambling websites and sold them to a South Korean cybercrime ring, the South’s National Intelligence Service revealed. 

Gyonghung Information Technology Co., a group of 15 members based in Dandong, a Chinese border town next to the North Korean city of Sinuiju, was reportedly paid US$5,000 by an unnamed South Korean criminal organization in exchange for the development of a website and $3,000 monthly for its maintenance, the agency, known as NIS, said on Wednesday. 

The company is also believed to have earned an extra $2,000 to $5,000 for increased website user traffic, involving commercial transactions via bank accounts owned by Chinese nationals and the global online payment service PayPal.

“Dandong has emerged as a base for apparel production in China, with the manpower from North Korea, and North Korean IT organizations have sprouted up and blended in among the North Korean workers in the area to make money and illegally earn foreign currencies,” said the NIS, adding that thousands of North Koreans generate income abroad through similar tactics. 

Since the United Nations Security Council’s 2017 sanctions against Pyongyang, North Korean citizens have been barred from working in China, a measure aimed at curtailing the North’s ability to fund its nuclear and missile development programs. But North Korean operatives have camouflaged themselves as IT workers by fabricating their identities.

The spy agency said the Gyonghung group is believed to be under the so-called Bureau 39 of the North Korean ruling party, which is responsible for managing and raising secret funds for leader Kim Jong Un. Each member of the group sends the North Korean government about $500 per month. 

The group is led by Kim Kwang Myong, a former official of Pyongyang’s main intelligence agency, Reconnaissance General Bureau. It also extorted personal information from users who accessed the websites it developed through the installation of malicious codes. 

The amount of revenue generated by the entity from the South Korean criminal organization is not immediately known. However, the organization was also found to have generated profits in the trillions of South Korean won through the use of its websites, and an investigation is underway into the ring.

Edited by Elaine Chan and Mike Firn