The collapse of cryptocurrencies affects everyone, even North Korea

Il crollo delle criptovalute colpisce proprio tutti, anche la Corea del Nord thumbnail

Il collapse of cryptocurrencies which occurred in recent months has made many investors lose a lot of money, and among the interested parties we also find the North Koreawhich in recent years has invested a lot of resources in cryptocurrency theft.

North Korea is also suffering from the decline in cryptocurrencies

The collapse of the cryptocurrency markets wiped out millions of dollars of funds stolen by North Korean hackers. This threatens a key source of funding for the sanctioned country and its arms programs. North Korea has invested resources in the theft of cryptocurrencies in recent years, making it a powerful hacking threat. In March, for example, there was one of the largest cryptocurrency thefts on record, in which nearly $ 615 million was stolenaccording to the US Treasury.

But the sudden drop in cryptocurrencies, which began in May, complicates Pyongyang’s ability to collect funds from that robbery, and other smaller ones, and it could affect how it plans to finance its weapons programsas some anonymous sources in the South Korean government have stated.

As reported Reuters, some old North Korean cryptocurrencies not recycled and monitored by blockchain analysis firm Chainalysis have plummeted. Funds stolen in 49 hacks from 2017 to 2021, for example, have fallen in value from $ 170 million to $ 65 million since the start of the year.

Another large amount of North Korean cryptocurrency, obtained from a robbery in 2021, which was worth tens of millions of dollars, it has lost 80% to 85% of its value in the last weeks. And it is now worth less than $ 10 million, according to what it says Nick Carlsenan analyst at TRM Labs, another US-based blockchain analytics company.

The authorities have no doubts

A person at the North Korean embassy in London said he could not comment on the incident because the hacking allegations are “totally false news”. “We didn’t do anything,” said the person, identified as an embassy diplomat. North Korea’s foreign ministry defined these allegations as US propaganda.

But the United States has no doubts, especially about the March attack from 615 million dollars to the detriment of the project Ronin, which powers the Axie Infinity game. The robbery was the result of a North Korean hacking operation dubbed Lazarus Group, US authorities say. North Korea traded almost all of the loot in Bitcoin, which has had several price movements. “It goes without saying that the North Koreans have lost a lot of value,” he said Carlsen. “But even at low prices, this is still a huge haul.”

According to the US, Lazarus is controlled by the Reconnaissance General Bureau, North Korea’s main intelligence office. The same has been accused of being involved in other attacks as well, like this one ransomware “WannaCry”; in the hacking of international banks and in the cyber attacks of 2014 to the Sony Pictures Entertainment.

Analysts are reluctant to give details on what types of cryptocurrency North Korea holds, as this could reveal the investigation methods. However, Chainalysis claimed that Ether accounted for 58% of the $ 400 million stolen in 2021.

Why is North Korea so interested in cryptocurrencies?

If you are wondering why North Korea might go so far as to steal cryptocurrencies, the answer is very simple. The country is subject to international sanctionsfor its nuclear program, which give limited access to global trade or other sources of income. This would make cryptocurrency theft attractiveor at least that’s what investigators claim.

Cryptocurrencies are estimated to represent only a small portion of North Korea’s finances. But as Eric Penton-Voak, coordinator of the UN expert group that monitors sanctions, says, it seems that cyber attacks have become “absolutely fundamental” for Pyongyang’s ability to evade sanctions and raise funds for its nuclear and missile programs.

critpovalute North Korea

An estimate from the Geneva-based International Campaign for the Abolition of Nuclear Weapons states that North Korea spends around $ 640 million annually on its nuclear arsenal. As Reuters reports, the country’s gross domestic product was estimated to be around $ 27.4 billion in 2020, according to the central bank of South Korea. And China, its largest trading partner, said in 2021 that it had imported just over 58 million dollars in goods from North Korea. Official numbers do not include contraband.

The nation gets only a small fraction from each theft

Huge sums of money are therefore needed to finance its nuclear and non-nuclear program. And we must also consider that through thefts North Korea would receive only a small fraction of the stolen sum. Because obviously you need to take advantage of brokers willing to convert or buy cryptocurrencies without asking questions. A February report from Center for a New American Security (CNAS) has estimated that in some transactions North Korea only gets a third of the value of what it allegedly stole.

According to Chainalysis, North Korea has turned to sophisticated methods to launder the stolen cryptocurrency. It has increased its use of software tools that bundle and encode cryptocurrencies from thousands of electronic addresses.

But the sheer scale of the recent hacks has strained North Korea’s ability to convert cryptocurrency into cash as quickly as in the past, he said. Carlsen. This means that some funds remained frozen even if their value goes down. “Converting into cash remains a key requirement for North Korea if it is to use the stolen funds.” “Most commodities or products are only traded in USD or other fiat currencies, not cryptocurrencies,” Carlsen said.

Obviously, as he claims Aaron Arnold del Royal United Services Institute, the government would also have other sources of funding besides cryptocurrencies. In December 2021, some UN sanctions observers said North Korea continues to contrabbandare carbone and other prohibited matters.