U.S. Attorney’s Office has stated that North Korean hackers “colluded with other criminals” to steal crypto assets from at least “three digital exchanges” before “laundering the proceeds.” According to the Asan Institute for Policy Studies, a U.S.-based blockchain firm headquartered in South Korea, there have been several instances of attacks on crypto exchanges.
Hacks have become a major problem
With heavy economic sanctions imposed on North Korea, the country is resorting to underhanded tactics to get around the sanctions. Cryptocurrencies have become a powerful tool in this regard, worrying governments and politicians. As more and more capital flows into the crypto market, it is not surprising that hackers are targeting it. The U.S. has also warned in the past of possible North Korean attacks on banks, which has made the situation worse.
The DeFi market is a prime target for hackers as many new protocols have emerged, some unaudited. Projects in this area have focused on audits and collaborative initiatives to prevent the loss of funds. According to a report The Block, hackers captured more than $1.4 billion from DeFi exploits in 2021, but one solution that has already shown some success is bug bounties.
US experts blame Pyongyang for the attack on Bithumb in 2017. There are three specific North Korean crypto hacks noted: 2017 hack in South Korean platform Bithumb ($32 million stolen), 4,000 Bitcoins illegally obtained from YouBit, and $281 million worth of crypto was lost on Kucoin.
Seoul also claims the North was behind the attack on South Korean crypto exchange YouBit, which was subsequently shut down.
The loot is considered a “long-term investment” in the process. Experts say Pyongyang plans to use the tokens in the long term instead of quickly exchanging them for cash.
The country hires hackers to commit cybercrime and launder money from foreign nations.
The United States also pointed out in October 2021 that the country had been doing this for several years. The U.S. statement said, “The apparent modus operandi is that the hackers send emails with malicious code to internal employees that then allow them to steal money from the exchanges. The country has also targeted exchanges in various parts of the world, including South Korea, Slovenia, Indonesia, and the United States.
North Korea allegedly stole more than $1.7 billion worth of cryptocurrencies from exchanges over several years.
The country used the money to fund its nuclear program and ballistic missile development.
As more and more capital flows into the crypto market, it is not surprising that hackers are targeting it.
The North Korean government sees crypto as a long-term investment. Instead of cashing the stolen crypto out, they are keeping the assets. Some media outlets wrote that a part of the funds goes to North Korea’s military supplies.
In March 2019, North Korea’s capital Pyongyang was accused of stealing $670 million in fiat foreign and digital currencies.
“Peel-chain” tactics involve moving money from one Bitcoin wallet to a new address in rapid and automated transactions over hundreds or even thousands of transactions. In this way, both the origin of the money is disguised and the risk of warning signs appearing is reduced.
According to some sources, North Korea aims to use the money from crypto tokens for building a coastal Wonsan-Kalma tourist attraction, and a flagship hospital in the capital.
Many crypto trading platforms are focusing on strengthening cybersecurity, as cybercrime in the industry is on the rise.