One of crypto’s strengths is also one of its weaknesses. Permissionless transactions enable privacy and sovereignty, but also crime. North Korea’s crypto hacking made headlines recently, but it is far from the only example.
In 2017, hackers made off with an estimated $450 million in Bitcoin and other cryptocurrencies from Japanese exchanges. Israeli authorities have also warned of an increase in cyber-crime related to cryptocurrency theft.
As the global economy moves towards digital finance, crypto-related crime is becoming more of a threat. As such, it’s critical that governments and cryptocurrency users take steps to prevent North Korea’s activities from occurring again.
North Korea’s Hacking
Despite North Korea’s struggling economy, the government spends much of the budget on its nuclear program. With sanctions on the rise, North Korea has turned to crypto to fund these ventures.
The United Nations claims that North Korean hackers have stolen billions of dollars from banks and cryptocurrency firms. They launder the funds through a series of financial transactions. Crypto can be traded for other crypto or fiat. Then, these funds find their way into North Korea’s weapons program or into the pockets of Kim Jong Un.
According to the BBC, North Korean hackers stole $1.7 billion in 2022 alone. This is nearly half of the total amount of stolen funds worldwide.
The consequences of these activities can be devastating. Hackers target foreign government agencies, private companies and educational institutions around the world. Not only do they threaten national security and the integrity of global financial markets, they also damage crypto’s reputation and credibility.
The US and South Korea Team Up
North Korean crypto hackers take advantage of tools created in the world of Decentralized Finance to launder money. There are many apps available to help users trade their funds for a mix of other crypto assets.
Cyber intelligence analysts at Google have identified “advance persistent threats,” or APTs. Google Cloud’s cyber intelligence arm, Mandiant, identifies APTs and tries to track them down. Last month, it released a report detailing how the hackers wash their stolen funds. “APT43 deposits stolen cryptocurrency into various cloud mining services to mine for a different cryptocurrency,” Mandiant Principal Analyst Michael Barnhart, told ABC news. “For a small fee, DPRK walks away with untracked, clean currency to do as they wish.”
At present, the only means of preventing these crimes is to intercept funds in the laundering process. When someone steals crypto, private investigators can follow it with block explorers that log every transaction on a given blockchain. Once they see funds transferred to a crypto account pegged to the U.S. dollar, they move quickly to intercept it.
This process is patchwork at best, and investigators rely on luck and chance to catch these criminals at the right time. Out of a $100 million stolen in late 2022, U.S. and South Korean officials intercepted $1 million in late January 2023.
Further Steps
Fortunately, measures are in place to protect against crypto theft. In crypto, no wallet balance is too big or too small for a hacker to show interest. Therefore, individuals should safeguard their funds any way they can. Individuals can utilize multi-signature authentication protocols, cold storage wallets, and two-factor authorization.
As far as businesses go, they should take a number of additional steps to protect themselves from hacks. First, it is important to implement strong password protocols and two-factor authentication to prevent unauthorized access.
Furthermore, businesses should regularly update their servers and networks with the latest security patches. They can deploy antivirus software to detect and eliminate malicious code before it can be executed. Finally, businesses should also use cold storage wallets to store their crypto assets in an offline environment. By following these steps, businesses can minimize the risk of North Korean hacking and protect their digital assets.
Thoughtful Regulation
It is clear that world governments need to address North Korea’s crypto hacking practices in order to protect global users and economies. Governments should take a stand against cyber crime by increasing cyber security protocols and enforcing stricter regulations on crypto traders.
It is important for users to be knowledgeable about the risks of trading in cryptocurrency and to take the necessary steps to protect their assets. Crypto hacking is a serious issue and one that must be addressed. Otherwise, a technology that should be used for good will turn into a weapon. And this may force regulators to ban crypto outright.
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