Crypto winter freezes into North Korea`s $2b stolen digital assets

In this post:

  • The current crypto winter has eroded North Korea’s stolen crypto reserves, which might impede its weapons testing program.
  • The United States Treasury shifts its focus to sanctioning North Korea for crypto heists. 
  • Reports estimate that North Korea is responsible for about $2 billion in stolen crypto heists in the last decade.

Since the beginning of this year, the cryptocurrency market has been in a tailspin. The current crypto winter may be long and severe. On the other hand, some investors remain hopeful that the tides will turn. The effects of the crypto winter have spread throughout the market, affecting individual and government investors. El Salvador has seen its share of the crypto winter. On the other hand, North Korea claims the title “most impacted nation.”

Crypto winter threatens North Korea’s stolen crypto stash

Experts claim that the deepening crypto winter jeopardizes a crucial source of funding for North Korea’s weapons programs. It is uncertain how much crypto the Pyongyang regime has amassed over time, but it will undoubtedly be considerable. A report by Bloomberg puts the total crypto stash at about $2 billion.

According to reports, the crypto winter jeopardizes North Korea’s main source of funding and weapons projects. In recent years, North Korea has invested considerable energy into cryptocurrency theft.

In March, the country’s actions jeopardized global financial stability and resulted in one of the most lucrative cryptocurrency robberies on record. According to the US Treasury, North Korea allegedly stole almost $615 million in a carefully coordinated hack.

The plummeting crypto values make it more difficult for Pyongyang to profit from the crime. According to two South Korean government sources, a lack of access to the stolen cryptocurrency might influence how it finances its weapons programs.

The crypto winter continues as North Korea fires a record number of missiles. Thus far, the Korea Institute for Defense Analyses in Seoul estimates that these weapons cost about $620 million. Despite the country’s economic downturn, North Korea is preparing to resume nuclear testing in the prevalence of the crypto winter.

According to Chainalysis, the amount of money stolen in 49 attacks on North Korean cryptocurrency between January 2017 and 2021 has decreased from $170 million to $65 million throughout the first half of 2022.

A cache of North Korean cryptocurrency valued at tens of millions of dollars stolen in 2021 has lost 80% to 85% of its value. Market analysts estimate the stash is now worth less than $10 million. Despite the mountain of evidence against North Korea, the regime is unshakable in its conviction that accusations of cryptocurrency hacking are “totally fake news.”

The North Korean government has dismissed allegations that it was behind the attack as American propaganda. According to the FBI, a $615 million March hack on a bitcoin project known as Ronin was carried out by a North Korean hacking group dubbed the Lazarus Group.

North Korea focuses on DeFi hacks for survival amid sanctions

The Reconnaissance General Bureau, North Korea’s primary intelligence agency, is accused of controlling Lazarus. It has been accused of involvement in the “WanaCry” ransomware assaults and cyber-attacks on international banks and customer accounts. The group is also linked to the 2014 Sony Pictures Entertainment hacking.

Analysts are hesitant to reveal specifics about North Korea’s cryptocurrency holdings, which might jeopardize investigation tactics. Ether, a typical cryptocurrency based on the open-source blockchain platform Ethereum, made up 58% ($230 million) of the $400 million stolen in 2021, according to Chainalysis.

North Korea is subject to various international sanctions for its nuclear weapons program. These restrictions have left the country with limited access to global commerce and other sources of income. According to experts, this has made crypto robberies more appealing. However, the current crypto winter has made these coins worthless. 

The sheer size of recent breaches has strained North Korea’s ability to convert cryptocurrency into cash as quickly as previously. As a result, some money has been trapped while the crypto winter rages throughout the sector.

During the crypto winter, Bitcoin has dropped by about 54%, and other cryptocurrencies have been negatively impacted. The crypto winter appears to reflect equity prices that have plummeted due to investor worries over rising interest rates and the increased possibility of a world recession.

Converting to cash remains a key requirement for North Korea if they want to use the stolen funds. Most of the commodities or products the North Koreans want to buy are only traded in USD or other fiat, not cryptocurrencies.

Nick Carlsen, an investigative analyst with the FBI

Last week, Bloomberg reported that North Korean-backed hackers had stolen up to $2 billion in crypto during the previous decade. Geoff White, the author of a new book called “The Lazarus Heist,” thinks the organization will continue to assault cryptocurrencies, mainly decentralized finance (DeFi) platforms.

Several of the most recent hacks have taken place on bridges that connect different blockchain networks, allowing for token sharing. Following the recent crypto losses, Treasury Under Secretary for Terrorism and Financial Intelligence Mark Jendro mentioned future strategies to collaborate on North Korea sanctions.

According to Brian Nelson, North Korea’s cryptocurrency fraud is the top concern on the list of pending sanctions against North Korea. Deputy Minister Nelson, who is in Korea for a visit, told Maeil Business Newspaper on the 28th: 

 I believe that virtual currency fraud is currently a significant source of income for the North Korean regime. Since it is being used as funds for weapons development, this will be an important priority for sanctions against North Korea.

Brian Nelson

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