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Analysis

Recent North Korea Arrest Raises Questions About Free Speech Rights

The Department of Justice may be using North Korea sanctions to hinder Americans’ right to free speech.

Last Updated: December 11, 2019
Published: April 30, 2020

This origin­ally appeared in Just Secur­ity.

Virgil Grif­fith, it’s safe to assume, did not have a happy Thanks­giv­ing. On arriv­ing at Los Angeles Inter­na­tional Airport from abroad, he was arres­ted that day. An unsealed crim­inal complaint revealed that he was charged with viol­at­ing sanc­tions against North Korea imposed under the Inter­na­tional Emer­gency Economic Powers Act (IEEPA).

A crim­inal enforce­ment action for viol­at­ing sanc­tions is rarely note­worthy; most cases involve defend­ants accused of trying to sell items surrepti­tiously to sanc­tioned coun­tries. But the facts as alleged in this case set it apart, and raise the troub­ling possib­il­ity that the Depart­ment of Justice (DOJ) could be using IEEPA to encroach on Amer­ic­ans’ free speech rights under the First Amend­ment.

IEEPA and North Korea

IEEPA, enacted in 1977, provides broad powers that allow the pres­id­ent to place finan­cial sanc­tions on indi­vidu­als, busi­nesses, govern­ments, and other entit­ies. In general, once entit­ies are sanc­tioned, Amer­ic­ans and Amer­ican busi­nesses are prohib­ited from conduct­ing any sort of finan­cial trans­ac­tion or trade with them. IEEPA is an emer­gency power that requires the pres­id­ent not only to declare a national emer­gency under the National Emer­gen­cies Act, but also, under the terms of IEEPA, to assert that the situ­ation consti­tutes an “unusual and extraordin­ary threat . . . to the national secur­ity, foreign policy, or economy of the United States,” which threat “has its source in whole or substan­tial part outside the United States.”

In 2008, as sanc­tions against North Korea under a differ­ent stat­utory scheme (the Trad­ing With the Enemy Act) were set to termin­ate, Pres­id­ent George W. Bush invoked IEEPA in Exec­ut­ive Order 13466 to continue the sanc­tions. Since then, Pres­id­ent Barack Obama and Pres­id­ent Donald Trump have both issued addi­tional exec­ut­ive orders modi­fy­ing the sanc­tions against North Korea. Most relev­ant here is Obama’s 2016 Exec­ut­ive Order 13722, which expan­ded the sanc­tions to prohibit, among other things, “the export­a­tion or reex­port­a­tion … by a United States person, wherever located, of any goods, services, or tech­no­logy to North Korea” (emphasis added). The Treas­ury Depart­ment’s Office of Foreign Assets Control (OFAC), which largely admin­is­ters IEEPA, has issued regu­la­tions to imple­ment these exec­ut­ive orders.

The Crim­inal Complaint

Virgil Grif­fith is a 36-year-old Amer­ican who has a doctor­ate in compu­ta­tion and neural systems. He is a long-time block­chain enthu­si­ast, and is affil­i­ated with the company Ethereum, which is behind an eponym­ous crypto­cur­rency. Accord­ing to the unsealed crim­inal complaint, Grif­fith traveled to North Korea via China in April to attend and present at a confer­ence titled “Pyongy­ang Block­chain and Crypto­cur­rency Confer­ence.” He chose to travel there even though his request for permis­sion to do so from the State Depart­ment had been denied.

Grif­fith’s present­a­tion was titled “Block­chain and Peace,” and accord­ing to the complaint, addressed “valu­able inform­a­tion on block­chain and crypto­cur­rency tech­no­lo­gies,” includ­ing, among other things, “how a block­chain tech­no­logy, includ­ing a ‘smart contract,’ could be used to bene­fit” North Korea. However, the complaint also notes Grif­fith’s view, expressed in an inter­view with the FBI, that his present­a­tion contained “basic concepts access­ible on the inter­net.” Indeed, Grif­fith’s assess­ment seems to be buttressed by the complaint, which at one point gives an example of discus­sions that arose around Grif­fith’s present­a­tion as concern­ing “tech­nical issues such as ‘proof of work’ versus ‘proof of stake’.” A quick search of those terms on the inter­net reveals multiple pages and videos explain­ing those concepts, and so while they may or may not be tech­nical, they are certainly not obscure. (The complaint also alleges that Grif­fith engaged in discus­sions “regard­ing using crypto­cur­rency tech­no­lo­gies to evade sanc­tions and laun­der money,” without any further partic­u­lars.)

The complaint char­ac­ter­izes Grif­fith’s activ­it­ies at the confer­ence as provid­ing “services” to North Korea within the mean­ing of the term in Exec­ut­ive Order 13722 and the OFAC regu­la­tions. The sole count against Grif­fith is conspir­acy to viol­ate IEEPA. Although the complaint alleges other facts that may form addi­tional bases for arguing a conspir­acy to viol­ate sanc­tions (for instance, text commu­nic­a­tions concern­ing how to send crypto­cur­rency between North and South Korea), it is clear that at least some portion of the conspir­acy claim is based on the claim that Grif­fith’s present­a­tion and discus­sions at the confer­ence were in them­selves “services” that viol­ate sanc­tions.

Plainly, the complaint uses the term “services” to describe Grif­fith’s activ­it­ies because that is some­thing prohib­ited under Exec­ut­ive Order 13722. But that is not the only word that could describe those activ­it­ies, and that matters because if Grif­fith’s actions were char­ac­ter­ized as a trans­fer of “inform­a­tion,” his conduct would likely be protec­ted under IEEPA.

IEEPA and the First Amend­ment

IEEPA expli­citly prohib­its sanc­tion­ing the trans­fer of inform­a­tion. In a 1988 amend­ment to IEEPA promp­ted by the govern­ment’s confis­ca­tion of published mater­i­als arriv­ing from sanc­tioned coun­tries known as the Berman Amend­ment (named after its spon­sor, Rep. Howard Berman (D-Calif.)), Congress specified that the pres­id­ent did not have the author­ity under that law to regu­late the import or export of “inform­a­tional mater­i­als.” OFAC inter­preted the Berman Amend­ment narrowly in its regu­la­tions, however. The regu­la­tions defined “inform­a­tional mater­i­als” as apply­ing only to tangible items, and thus not apply­ing to inform­a­tion conveyed in intan­gible ways such as by tele­phone. The regu­la­tions also limited the trans­fer of inform­a­tion to the purchas­ing of completed products (e.g., purchas­ing already-writ­ten books from a sanc­tioned coun­try), and prohib­ited more iter­at­ive or collab­or­at­ive processes such as edit­ing an unfin­ished manu­script purchased from a sanc­tioned coun­try before distri­bu­tion.

When OFAC began inter­pret­ing the prohib­i­tion narrowly, and some (but not all) courts found the OFAC and DOJ inter­pret­a­tions reas­on­able, Congress went back in 1994 and amended IEEPA again with the Free Trade in Ideas Act (FTIA) to strengthen and update the language of the Berman Amend­ment and clarify that Congress inten­ded the prohib­i­tion on regu­lat­ing inform­a­tion trans­fers to be far-reach­ing. After the passage of the FTIA, this excep­tion to IEEPA reads as it does today at 50 U.S.C. § 1702(b)(3):

“The author­ity gran­ted to the Pres­id­ent by this section does not include the author­ity to regu­late or prohibit, directly or indir­ectly … the import­a­tion from any coun­try, or the export­a­tion to any coun­try, whether commer­cial or other­wise, regard­less of format or medium of trans­mis­sion, of any inform­a­tion or inform­a­tional mater­i­als, includ­ing but not limited to, public­a­tions, films, posters phono­graph records, photo­graphs, micro­films, microfiche, tapes, compact disks, CD ROMs, art works, and news wire feeds.”

(It then clari­fies that the excep­tion does not apply to certain items listed in other stat­utory provi­sions.)

The congres­sional confer­ence report on the FTIA, which states that its purpose is to “clarify [the Berman Amend­ment] by elim­in­at­ing some of the unin­ten­ded restrict­ive admin­is­trat­ive inter­pret­a­tions of it,” speaks in broad terms regard­ing the interests it intends to protect. It first notes that the Berman Amend­ment “was expli­citly inten­ded, by includ­ing the words ‘dir­ectly or indir­ectly,’ to have a broad scope.” It then laments that “the Treas­ury Depart­ment has narrowly and restrict­ively inter­preted the language in ways not origin­ally inten­ded,” before specify­ing: “The commit­tee of confer­ence intends these amend­ments to facil­it­ate trans­ac­tions and activ­it­ies incid­ent to the flow of inform­a­tion and inform­a­tional mater­i­als without regard to the type of inform­a­tion, its format, or means of trans­mis­sion…”

Congress also enacted a Sense of Congress that a pres­id­ent should not restrict travel for “inform­a­tional, educa­tional, reli­gious, cultural, or human­it­arian purposes or for public perform­ances or exhib­i­tions.” The confer­ence report spoke expans­ively about what Congress inten­ded the FTIA, in combin­a­tion with the travel state­ment, to achieve, which was to:

“seek to protect the consti­tu­tional rights of Amer­ic­ans to educate them­selves about the world by commu­nic­at­ing with peoples of other coun­tries in a vari­ety of ways, such as by shar­ing inform­a­tion and ideas with persons around the world, trav­el­ing abroad, and enga­ging in educa­tional, cultural and other exchanges with persons from around the world.”

As the Ninth Circuit described it in a 2003 decision, the Berman Amend­ment and FTIA were “designed to prevent the exec­ut­ive branch from restrict­ing the inter­na­tional flow of mater­i­als protec­ted by the First Amend­ment.”

Side-step­ping the Law?

Present­ing at a confer­ence and enga­ging in discus­sions would seem to be clear instances of inform­a­tion trans­fer. Indeed, while the complaint does not char­ac­ter­ize Grif­fith’s actions as provid­ing inform­a­tion, the U.S. Attor­ney for the South­ern District of New York justi­fied the charges in a DOJ press release by stat­ing: “Virgil Grif­fith provided highly tech­nical inform­a­tion to North Korea, know­ing this inform­a­tion could be used to help North Korea laun­der money and evade sanc­tions.”

The OFAC regu­la­tions exclude from the inform­a­tion exemp­tion mater­i­als that are not fully complete when trans­ferred (i.e., a completed book would be okay, film clips that need to be edited together would not). The DOJ could argue that this applies to Grif­fith’s inter­ac­tions at the confer­ence, perhaps on a theory that his parti­cip­a­tion in discus­sions, and partic­u­larly in answer­ing ques­tions, means the inform­a­tion he trans­ferred was not a complete product on arrival. It is also possible that the DOJ will argue that the exemp­tions do not apply to at least some of the North Korean indi­vidu­als with whom Grif­fith may be accused of having trans­acted. OFAC regu­la­tions exclude from the inform­a­tional exemp­tions persons or entit­ies that are also sanc­tioned pursu­ant to a differ­ent sanc­tion­ing stat­ute (the UN Parti­cip­a­tion Act), presum­ably on the basis that that stat­ute is not subject to the inform­a­tion excep­tion. But to the extent that the DOJ’s argu­ments are based on OFAC regu­la­tions rather than IEEPA, there will be room for Grif­fith to argue that those inter­pret­a­tions are invalid. Thus far, his attor­ney has simply stated: “We dispute the untested alleg­a­tions in the crim­inal complaint, and Virgil looks forward to his day in court, when the full story can come out.”

Whatever the DOJ’s ulti­mate argu­ments, its approach has raised seri­ous ques­tions about whether it is faith­fully adher­ing to the Berman Amend­ment and the FTIA. This case appears to repres­ent a seri­ous threat to the broad excep­tions for inform­a­tional trans­fer and First Amend­ment activ­it­ies that Congress inten­ded.