OFAC Announces Sanctions Against Chinese-Based Cybersecurity Company

On January 3, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced sanctions on a Chinese-based cybersecurity company, Integrity Technology Group, Inc. (“Integrity Tech”). These sanctions were in response to Integrity Tech’s “role in multiple computer intrusion incidents against U.S. victims.”

About the company

Integrity Technology Group Inc, formerly Beijing Integrity Technology Co Ltd, is a China-based company mainly engaged in the research and development, production and sales of network security products, as well as the provision of network security services. Its products and services mainly include network shooting range products, security control and honeypot products, security tool products, security protection series services, network security competition services and other services, among which other services mainly include online and offline training services. Its security tool products are mainly for government supervision departments, and other services are mainly for individuals, enterprises and institutions. The Company mainly operates in the domestic market.

The incidents have been attributed to Flax Typhoon, a Chinese state-sponsored threat actor. Flax Typhoon “used infrastructure tied to Integrity Tech during their computer network exploitation activities against multiple victims.” Flax Typhoon, active since at least 2021, has successfully targeted U.S. critical infrastructure as well as organizations such as universities, government agencies, telecommunications providers, and media organizations.

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The sanctions were issued under Executive Order 13694, as amended by Executive Order 13757, which targets entities involved in cyber-enabled activities that threaten national security. Some of the implications of the sanctions from OFAC include:

• All property and interests in property of Integrity Tech that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to the OFAC.

• S. individuals or entities are prohibited from engaging in transactions involving Integrity Tech.

• S. entities that are owned 50% or more by Integrity Tech are blocked.

• Financial institutions and other persons that engage in certain transactions or activities with Integrity Tech may expose themselves to sanctions or be subject to an enforcement action.

Integrity Tech responded to these sanctions by stating the decision by the OFAC lacks factual basis and characterized the accusations as baseless.

Bradley Smith, Acting Under Secretary for Terrorism and Financial Intelligence, emphasized that they “will not hesitate to hold malicious cyber actors and their enablers accountable for their actions.” This statement in addition to the sanctions from OFAC signal the U.S. Government’s continued effort to mitigate cyber threats within the U.S. As these cyber threats continue individuals and organizations should remain diligent in their efforts to maintain adequate security controls.

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