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Crypto theft: North Korea-linked hackers stole $1.7 billion last year
23 February 2023 16:53
Few forms of celebration are as close to literally burning money as fireworks and missile tests. And for North Korea, a great fan of both, the more it burns the better. It launched more than 95 cruise and ballistic missiles in 2022, a new record. And it loves above all to splurge on the biggest, showiest rockets, like the intercontinental ballistic missile it fired eastwards into the sea on February 18.
Despite being unable to feed its people, North Korea has found innovative ways to fund its missiles programmes, including by forging foreign currency, committing insurance fraud, and making and selling arms and narcotics. A more novel revenue stream is stolen cryptocurrency.
Last year its hackers pinched a record $1.7 billion of the stuff, The Economist says citing the report published this month by Chainalysis, a data firm based in New York.
Some of North Korea’s hacking thefts were eye-wateringly big. Last March it ripped off a cross-chain bridge, a method for moving cryptocurrency from one coin’s blockchain to another, associated with the game Axie Infinity. At the time it was discovered, the stolen currency was worth more than $600 million, making it the second biggest crypto-theft ever.
To launder their loot North Korean hackers employ all sorts of tricks, including splitting up the money, moving it between different crypto wallets, converting it into different coins and putting it through mixers—large digital pools where crypto owners can deposit funds to obscure their origins.
Some of the stolen crypto was put to direct use. In 2022 two South Koreans, including an army captain, were arrested on suspicion of selling secrets to the North in return for bitcoin. But North Korean hackers mostly try to turn the loot into hard cash, either through a broker or more commonly through a centralised exchange.
The crypto industry is meanwhile getting better at policing itself. On February 14th two centralised exchanges, Binance and Huobi, froze $1.4 million of cryptocurrency associated with a North Korean hack.
The hackers are also adapting and improving. Even if North Korea’s hackers could actually lay their hands on only a fraction of the $1.7bn they stole, it would all be worthwhile, notes Dennis Desmond, a former American intelligence officer who now teaches at the University of the Sunshine Coast in Australia. “It’s all free cheese,” he says.
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