The Korea Herald


Cash-strapped North Korea turning more to cryptocurrency

By Jung Min-kyung

Published : Dec. 19, 2017 - 18:42

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North Korea may be turning its cyberwarfare to the growing cryptocurrency market, with increasing reports pointing to Pyongyang in bitcoin-related hacking attempts.

The reclusive regime may be eying the virtual currency as its transactions are difficult to trace, allowing Pyongyang to bypass international sanctions, experts here said. 

(Yonhap) (Yonhap)

“It is difficult to trace a bitcoin exchange if North Korea wants its financial transactions to remain in the dark,” Lee Kyung-ho, a professor at Korea University’s Graduate School of Information Security, told The Korea Herald.

Pyongyang is suspected to have been involved in a recent series of hacking attempts targeting local cryptocurrency exchanges.

In July, South Korea’s largest cryptocurrency exchange platform, Bithumb, was hacked, which resulted in monetary losses worth some 7.6 billion won ($7 million).

A recent report by Chosun Ilbo said the National Intelligence Service found evidence that North Korea was involved in the leaking of personal information from some 30,000 accounts from Bithumb. The evidence was passed on to prosecutors here for further investigation.

Months prior to the Bithumb hacking, other Seoul-based bitcoin exchanges, such as Yapizon and Coinis, were also targeted in similar cyber thefts.

Emails encrypted with malicious codes were sent to people in the bitcoin industry here to breach security systems, Seoul Metropolitan Police Agency’s cybersecurity division said in July.

On Tuesday Yapizon, now called YouBit, was shut down from the damage it received from another cyberheist. The platform reportedly lost an additional 17 percent of its cryptocurrencies from the hacking attack, which happened earlier in the day. Whether North Korean hackers were involved in the latest attack is unknown.

Professor Lee added bitcoin’s soaring value coupled with how it can smoothly “move across” borders is the reason why the North is eyeing the market, amid international sanctions curbing the flow of foreign currency into the country. According to Lee, it was widely predicted under the current circumstances that bitcoin-related hackings would eventually emerge as a popular method for the North to secure foreign currency.

“There are routes where a bitcoin can be exchanged for another form of cryptocurrency, which can make it hard for authorities to trace where each bitcoin came from and eventually ends up,” he said.

“Bitcoin is also relatively free from international sanctions including United Nations Security Council Resolutions because it is not an asset that governments can control or freeze. If a government imposes regulation on a certain cryptocurrency exchange, then its users can just move to another platform,” explained Lee.

One problem that the international community faces is that cyberattacks by North Korean hackers are growing more aggressive and bolder with time.

The Donald Trump administration on Monday publically accused North Korea as being responsible for spreading WannaCry malware in May.

In the WannaCry attack, more than 300,000 computers in 150 countries were locked down and those behind the attack demanded payment in bitcoin to free their systems. Several fell victim to the ploy, including British hospitals and global companies, such as FedEx and Nissan.

South Korea has been keeping tabs on its wayward neighbor’s online activities, aware of its growing reputation as a major hub for virtual currencies backed by its internet speed and wide broadband access -- which could increase the risk of falling under North Korea’s cyberattacks at the same time.

North Korea has been linked to “various activities” to dodge sanctions and earn foreign currency, the South Korean government said Tuesday, while acknowledging the rogue nation’s latest bitcoin-related hacking attempts.

“The government is monitoring (North Korea’s) trends related to bitcoin,” Baik Tae-hyun, spokesman for the Unification Ministry, said at a regular press briefing. Baik’s remarks referred to a number of news reports shedding light on North Korea’s alleged trading of cryptocurrency for goods along with recent bitcoin market hackings.

“We are aware that North Korea has been engaged in various activities to evade sanctions and earn foreign currency,” he added.

According to California-based cybersecurity firm FireEye, the North is targeting the virtual currency market to avoid sanctions and fund Kim Jong-un’s regime, it said in a report released in September. It could be attempting to rake hard cash in exchange for stolen virtual coins, it added.

Baik also said the South Korean government is seeking measures to curb North Korea’s apparent illicit acts associated with digital currency, in cooperation with relevant authorities, including the state cybersecurity center.

“We are continuing efforts to block North Korea’s hacking attempts,” he said.

But the official did not confirm on whether the government has detected any solid evidence backing the North’s actual involvement in the crimes. He also remained tight-lipped on whether the government holds data on the estimated amount of bitcoins the North possesses.

The news of North Korea’s latest bitcoin-related crimes come as the isolated nation is reportedly struggling under a series of United Nations Security Council sanctions drawn to cripple its economic growth. It is widely known that Pyongyang has been funding its nuclear weapons program with foreign currencies it obtained through international trade and business.

By Jung Min-kyung (