On May 31, the conservative Chosun Ilbo, South Korea's largest daily newspaper, reported that Kim Hyok-chol, North Korea's special envoy to the US, was executed by the firing squad in March as part of a political purge of senior officials held responsible for the breakdown of the second summit meeting held in February between Pyongyang leader Kim Jong-un and American President Donald Trump.
The sources told CNN that Kim Hyok-chol is being investigated for his role in the failed Hanoi summit.
Kim Jong-un's translator in Hanoi, Kim Song-hye, also remains in custody and under investigation, they added.
Tuesday's development comes a day after it was reported that Kim Yong-chol, a former North Korean spymaster and US Secretary of State Mike Pompeos counterpart in recent diplomatic contacts between Pyongyang and Washington, resurfaced in public after the South Korean daily said that he was banished to forced labour in a re-education camp.
The North's official Korean Central News Agency on Monday included Kim Yong-chol's name on a list of officials who accompanied Kim Jong-un to an art performance given by the wives of military officers on Sunday.
After the Chosun Ilbo story was out, Pompeo had said that the US was looking into the report, while South Korea's Presidential Blue House said it was not appropriate "to make any hasty judgment or comment about that part".
When asked about the report, one of the sources who spoke to CNN on Tuesday said, "the news was wrong".
The fate of Kim Hyok-chol had not been determined, but he could still face "heavy punishment", the source added.
( With inputs from IANS )