North Korean Hackers’ Crypto Obsession

In July 2024, the Indian crypto platform WazirX confirmed that $230 million was stolen by North Korea-supported hackers. This is just the latest of countless crypto heists and blockchain attacks linked to the nation.

Throughout 2023 North Korea’s illegal crypto activities soared to a record high — and throughout 2024 the trend intensified.

As United Nations investigations look into 58 cyberattacks allegedly conducted by North Korean hackers totaling $3 billion in illegal profits in just six years, questions remain unanswered.

Techopedia spoke with Jared Grey, Managing Director of Sushi Labs — Sushi DAO’s strategy and development arm, to understand why North Korean hackers are obsessed with crypto and how this influences the market and the blockchain industry.

Table of Contents Table of Contents

1. Key Takeaways
2. The North Korean Elephant in the Blockchain Room
3. How Cybercrime on the Blockchain Impacts the Industry
4. Crypto Customers Trapped in The Frontline of North Korean Blockchain Attacks
5. North Korean Crypto Crime Impacts Can Spill onto the Formal Economy, Wall Street, and Big Banks
6. Additional Blockchain Security Considerations
7. The Bottom Line
8. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. The North Korean Elephant in the Blockchain Room
3. How Cybercrime on the Blockchain Impacts the Industry
Show Full Guide
4. Crypto Customers Trapped in The Frontline of North Korean Blockchain Attacks
5. North Korean Crypto Crime Impacts Can Spill onto the Formal Economy, Wall Street, and Big Banks
6. Additional Blockchain Security Considerations
7. The Bottom Line
8. References

The North Korean Elephant in the Blockchain Room

When it comes to crypto and blockchain security incidents, no other nation-supported group of hackers comes even close to what North Korean threat actors are doing. Techopedia asked Grey from SushiLabs about these groups’ obsession with the crypto industry.

“North Korean hackers target cryptocurrency due to its high value and global liquidity while leveraging its pseudo-anonymity and decentralization.”

Grey explained that economic sanctions limit Pyongyang’s access to international financial resources. This makes cryptocurrency theft a lucrative method to fund government operations, including, purportedly, sanctioned missile programs, Grey explained.

The March 7 U.N. report identified hackers subordinated to the Reconnaissance General Bureau (RGB), including Kimsuky, the Lazarus Group, Andariel, and BlueNoroff, which supports Grey statements. The report also warns that North Korea is bypassing sanctions and using crypto to illegally fund its defense programs.

How Cybercrime on the Blockchain Impacts the Industry

Grey from SushiLabs said that the blockchain’s decentralized nature can make tracing transactions and recovering stolen assets challenging, further emboldening North Korean hackers.

Grey also spoke about the consequences North Korean groups have on regional and international blockchain development and progress.

“Due to their exploitation of the technology, North Korean hacking groups can undermine regional and international blockchain development.

“Their sophisticated attacks erode trust, potentially deterring investors and adoption. Without effective law enforcement intervention, these activities could stifle innovation, increase regulatory scrutiny, and hinder growth.”

Additionally, Grey said that the ongoing threat forces blockchain developers and companies to invest heavily in security, diverting resources from innovation.

Crypto Customers Trapped in The Frontline of North Korean Blockchain Attacks

Blockchain and crypto adoption continue to advance with users turning to the technology for different reasons. A late 2023 Binance survey found that almost half of respondents use crypto to earn extra income and 36% leverage it for financial security and independence.

Crypto has also been a safe haven against inflation for many users, with 9% of users recognizing they offset inflation in the blockchain and save money (19%). However, different studies reveal that crypto’s potential is constrained by consumers’ concerns about systemic instability and crime, including fraud and hacking.

Crypto exchanges are the least trusted financial services among non-crypto users — with 30% saying they don’t trust them at all. Additionally, customers are also worried about artificial intelligence (AI) risks on the blockchain, and many around the world are still making their peace with the deep scars of the FTX collapse.

Chris Hauk, Consumer Privacy Champion at Pixel Privacy spoke to Techopedia about how this issue impacts crypto users and customers.

“Crypto heists can cause users to lose faith in the security and privacy of the cryptosystem. If heists continue, we will likely see affected cryptocurrencies lose investors and users.”

Hauk explained that crypto holders could be targeted individually by North Korean-sponsored hackers. They could also see the crypto they have invested in falter or fail due to attacks by hackers.

Paul Bischoff, Consumer Privacy Advocate at Comparitech also spoke to Techopedia about customer impacts.

“Crypto heists undermine development and progress of blockchain technology. No one wants to invest in a coin if it can be stolen and/or the DPRK owns a large stake.

“They (crypto users) could be targeted by DPRK-sponsored hackers, or the DPRK could reduce the value of a coin by undermining its reputation.”

Grey from SushiLabs added that regular crypto holders should be concerned about North Korean hackers because their actions threaten the security and value of investments.

“Successful hacks can lead to significant financial losses. The involvement of North Korean hackers can also attract unwarranted regulatory attention to legitimate industry actors, complicating the everyday use and trading of cryptocurrencies.”

North Korean Crypto Crime Impacts Can Spill onto the Formal Economy, Wall Street, and Big Banks

Some experts will argue that North Korea’s secondary goal — after obtaining illegal funds to finance their sanctioned programs — is to disrupt and shape the future of the blockchain, as well as generate economic chaos. As criminal activities and insecurity spread through an environment, regulations, law enforcement and governments are forced to take action.

Recent economic incidents, such as the collapse of the Silicon Valley Bank, have shown how Wall Street, big banks, and large financial international institutions are connected to main blockchain commodities, major crypto players, and stablecoins.

Grey from SushiLabs remained positive about the relationship between both economies.

“Blockchain’s decentralized nature offers both strengths and vulnerabilities,” Grey said. “Decentralization enhances system resilience against specific attacks but poses challenges with coordinated security responses.”

“Integrating blockchain with the formal economy, including Wall Street, big banks, and regulatory bodies, introduces exciting new opportunities for transparency and autonomy while posing challenging new obstacles with bad actors.”

However, government intervention is not always smooth sailing. When it comes to the global blockchain, these interventions disrupt the flow of the billions of dollars that move through the decentralized economy. Additionally, in the form of regulations, the already fragile relationship between the traditional formal economy and the blockchain can be weakened.

Additional Blockchain Security Considerations

As blockchain technology evolves, stakeholders must remain vigilant and proactive in addressing security challenges. Hauk from Pixel Privacy warned that while blockchain technology is considered secure, the cryptocurrency’s investors and users are the true weak spots in security protection.

On the other hand, Grey from SushiLabs explained that the threat from North Korean hackers highlights the need for robust security practices and international law enforcement cooperation.

“The blockchain community must balance decentralization ideals with practical security and compliance considerations,” Grey said.

“Regular users, investors, and developers should conduct routine security reviews to protect assets and support the blockchain ecosystem’s health and growth.”

The Bottom Line

The North Korean cyber threat looms large over the blockchain ecosystem, acting as a persistent, destructive force. By exploiting the technology’s decentralized nature, these hackers not only siphon billions but also undermine trust, stifle innovation, and distort the delicate balance between the crypto world and traditional finance.

Ultimately, the battle against North Korean cybercriminals is a global challenge requiring a multifaceted approach. Enhanced international cooperation, robust security measures, and a vigilant crypto community are essential to protect the integrity of the blockchain and safeguard the interests of users, investors, and the broader financial system.