A recent report from the blockchain analytics firm Chainalysis reported that the Democratic People’s Republic of Korea was allegedly responsible for stealing up to $1.7 billion in cryptocurrencies during the year 2022.
This year ended up being the most profitable year ever, for cryptocurrency hackers. North Korea alone stole 44% of the total hacked assets in 2022, totaling up to $3.8 billion. According to Chainalysis’ study, decentralized finance protocols, or DeFi, accounted for more than 82% of bitcoin stolen in 2022.
In addition, the FBI acknowledged that the North Korean-affiliated Lazarus Group was involved in a $100 million crypto crime on the Horizon bridge blockchain network last year.
After years of facing sanctions by the U.S. Government, the socialist country is turning to crypto in order to fund its ongoing nuclear arsenal.
Chainalysis also draws attention to the fact that crypto hacking makes up a large chunk of the North Korean economy. Under Kim Jong-un’s leadership, North Korea “only” made about $142 million in exports in 2020, a measly amount when compared to the billions hacked last year.
Laundering Hacked Crypto
After stealing such a large amount of assets, it is speculated that North Korea turns to various methods to launder cryptocurrency, including using multiple exchanges and mixing services to conceal the origin of funds, creating false identities to obscure transactions, and exploiting vulnerabilities in the financial system.
The crypto analysis firm claims that the country launders cryptocurrency using “mixers,” which mingle cryptocurrencies from numerous users to obscure the source of the payments.
In addition, N.K. could also be using NFTs to hide the traces of their crypto transactions. NFTs, which are unique and indivisible digital assets, can be used to transfer value and ownership, similar to cryptocurrency.
By using NFTs, it might be possible to conceal the origin of funds, make transactions difficult to trace, and move money across borders anonymously.