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North Korea is Using Hackers to Fund its Nuclear Program Through Crypto Heists; Here's How

These cyber thefts raise serious concerns about the connection between cybercrime and funding for North Korea's nuclear weapons programs.
Pexels |  A Growing Threat in Crypto Espionage Funding Nuclear Programs In North Korea
Pexels | A Growing Threat in Crypto Espionage Funding Nuclear Programs In North Korea

Cyber warfare may not just cause damage within the digital realm, as the activities of hackers can lead to serious real-world consequences. North Korean-affiliated hackers have emerged as one such threat, after allegedly orchestrating a series of cyber attacks that resulted in the theft of over $200 million in cryptocurrency between January and August 2023, per CNBC. This accounts for more than 20% of all stolen crypto in 2023, and not only highlights the financial impact on the crypto community but also raises serious concerns about the connection between cybercrime and funding for North Korea's nuclear weapons programs.

Pexels | North Korean-affiliated hackers

The scale of the crypto-threat

The audacity of these cyber operations amounting to a staggering $200 million in stolen cryptocurrency has caught the attention of the global community, prompting a closer examination of the motives and methods employed by these state-sponsored hackers. According to blockchain intelligence firm TRM Labs, this surge in cyber attacks is linked to an apparent acceleration in North Korea's nuclear and ballistic missile programs, indicating a strategic shift towards cybercrime as a means of funding to sidestep sanctions.

To fully understand the implications of these cyber activities, it is crucial to consider the geopolitical context surrounding North Korea. The Democratic People's Republic of Korea (DPRK) has been subject to international sanctions aimed at curbing its nuclear ambitions since its first nuclear test in 2006. These sanctions encompass restrictions on financial services, as well as transportation of minerals, metals, and arms, with the primary goal of limiting the regime's access to resources required to sustain its nuclear activities. The stolen cryptocurrency serves as a strategic workaround, providing the regime with a source of funding that bypasses traditional economic constraints.

Pexels | Sanctions

Tactics and exploits of these crypto thieves 

North Korean hackers employ a sophisticated arsenal of tactics to exploit vulnerabilities within the cryptocurrency ecosystem. Among these tactics are phishing attacks, supply chain infiltrations, and infrastructure hacks that often involve compromising private keys. The FBI has attributed a $100 million crypto heist on the Horizon Bridge in 2022 to North Korea-linked hackers, showcasing the scale and financial impact of their actions. In March of the same year, these hackers targeted the popular blockchain game Axie Infinity, stealing over $600 million worth of crypto assets using stolen private keys—a staggering example of the audacity and success of their operations.

As the global community grapples with the escalating threat posed by North Korean hackers, it is essential to understand the evolving strategies they employ. Recent reports indicate that these hackers have taken on new personas, posing as recruiters to lure unsuspecting victims. A notable case involves the infiltration of blockchain gaming firm Sky Mavis, where a North Korean-affiliated hacker, disguised as a recruiter, accessed an engineer's computer through a malware-laced document. This breach resulted in the theft of over $600 million in cryptocurrency from Sky Mavis's digital pets game, Axie Infinity.

Bitcoin, maybe used by the Russian government to circumnavigate the tough economic sanctions that have been imposed. Getty Images | Photo by Matt Cardy

The global response to the crypto theft

In response to the escalating threat, the FBI has issued warnings to crypto companies, alerting them to potential "cash outs" amounting to $40 million by North Korea-linked hackers. Additionally, the US Treasury's Office of Foreign Assets Control and South Korea's authorities have imposed sanctions on entities supporting North Korean IT professionals involved in fraudulent activities and fund laundering. These concerted efforts aim to disrupt the financial networks supporting the regime's nuclear operations.

The rise of North Korean hackers in the cryptocurrency space represents not only a financial threat but also a significant challenge to global security. As the world grapples with this emerging and evolving hybrid threat, it becomes increasingly clear that international cooperation and heightened cybersecurity measures are imperative. The urgency to address the sophisticated tactics of North Korean-affiliated hackers is underscored by their ability to adapt and persist in the face of sanctions and increased scrutiny. The future of cryptocurrency security and the geopolitical landscape hinges on proactive measures to neutralize this evolving cyber threat and protect the integrity of the global financial system.