Treasury Moves to Ban Huione Group for Laundering $4 Billion
The Treasury Department is moving to cut a Cambodian financial group’s access to the U.S. financial system for allegedly laundering billions of dollars in cryptocurrency for North Korea’s Lazarus Group threat group and transnational entities running vast cyberscam operations.
Treasury’s Financial Crimes Enforcement Network (FinCEN) this week took the initial step against the Huione Group conglomerate and various subsidiaries for laundering the proceeds from Lazarus Group’s nation-state espionage and fraud operations and convertible virtual currency (CVC) investment scams, including “pig butchering,” romance scams, and similar schemes.
The agency issued a finding and notice of proposed rulemaking (NPRM), laying out the case against the Huione Group, which has been the focus of investigations by Chainalysis, Elliptic, and other blockchain analysis organizations.
According to the NPRM, the Huione Group is an overarching entity that includes subsidiaries – Haowang Guarantee, Huione Pay PLC and Huione Crypto – that run parts of the operation, which between August 2021 and January laundered about $4 billion in illegal proceeds.
“Huione Group has established itself as the marketplace of choice for malicious cyber actors like the DPRK [Democratic People’s Republic of Korea] and criminal syndicates, who have stolen billions of dollars from everyday Americans,” Treasury Secretary Scott Bessent said in a statement. “Today’s proposed action will sever Huione Group’s access to correspondent banking, degrading these groups’ ability to launder their ill-gotten gains.”
Huione’s Massive Operation
FinCEN said Huione Group, which was founded in 2014 and apparently is owned by a person in Cambodia, began as a fiat currency exchange service but has expanded since. It includes at least three subsidiaries that each play a different role in the money laundering operation. The group also provides customer and public relations services to those subsidiaries.
Huione Group also created its own stablecoin, the U.S. agency said.
Multiple Entities
Haowang Guarantee calls itself a professional e-commerce platform, selling virtual digital products and transaction services, but FinCEN noted that it enables the sale of illicit services and contraband, with Elliptic saying the business “appears to operate in a manner similar to a darknet market” by letting third parties sell such wares as money-laundering equipment and services.
In a report in February, Chainalysis reserachers wrote that the subsidiary – which they refer to as Huione Guarantee – has processed $70 billion in crypto transactions since 2021 and is “heavily used for illicit crypto-based activities supporting the growing pig butchering industry in Southeast Asia, including the sale of scam technology products, money laundering services and much more.”
Huione Pay PLC is registered as a transaction services business but was used to turn crypto into fiat money to help launder cyberscam proceeds. Until 2023, it ran a business in Canada, and this year Huione Group announced plans to expand it into North America and other new markets, according to U.S investigators. Huione Crypto provides crypto trading services through its “Huione Exchange,” FinCEN said.
The parent company and its entities share the same CVC infrastructure, and while Huione Group doesn’t operate in the United States, there are indications that some of its subsidiaries have Money Services Businesses (MSBs) registered in the country. It also works with other companies that have accounts in the United States.
‘Professionalizing the Scam Ecosystem’
In their report, Chainalysis said Huione Group is “professionalizing the scam ecosystem” – including hosting vendors on Huione Guarantee that sell generative AI tools for scams – and helping to fuel the growth of the pig butchering industry in Southeast Asia. The term is used for scams, where perpetrators gain the confidence of people online through weeks or months of romance or money-making promises and then entice them into investing in what turns out to be fake opportunities, disappearing after the investments are made.
Many of these scams are run by organized groups in lawless parts of Southeast Asia, often using forced labor.
No Effort to Change
FInCEN noted that much of the illegal revenue laundered via Huione Group’s efforts is well-documented as having come via scams, and that the conglomerate has made promises to improve the operations through an anti-money laundering/know your customer (AML/KYC) program, but has made no real improvements.
Organizations and individuals have 30 days to file comments on the NPRM before it’s published in the Federal Register.
