WASHINGTON, D.C. — North Korea, according to experts, is taking advantage of the lack of worldwide regulatory controls on cryptocurrency to steal digital currencies in order to fund its nuclear and missile programs.
According to Jason Bartlett, a researcher at the Center for a New American Security (CNAS), “crypto presents Pyongyang with a new kind of currency that is substantially less regulated and understood by national governments, financial institutions, and international agencies.”
According to a United Nations panel of specialists monitoring sanctions stated in a report delivered to the United Nations Security Council earlier this month, North Korea stole more than $300 million in virtual assets between 2019 and 2020.
The panel estimates that North Korean cyber attackers stole roughly $2 billion in 2019, probably including cryptocurrency and other assets, to support the country’s nuclear development, according to a confidential study obtained in part by CBS News.
North Korea has recently increased the frequency of its missile tests, firing 11 missiles in January.
Cryptocurrency is a digital type of currency that is “almost impossible to counterfeit,” is often not issued by a central authority, and allows for cheaper and faster money transfers. According to Investopedia, it can also be changed to fiat money, which is “a government-issued currency that is not backed by a tangible commodity, such as gold or silver, but is instead backed by the government producing it.”
According to Bartlett, the lack of centrally regulated oversight in DeFi platforms leads to a poor practice of know-your-customer (KYC) processes that gather information on clients, making it simpler for North Korean fraudsters to conceal their identities and steal cryptocurrency funds.
According to Investopedia, DeFi is an emerging financial technology that “eliminates intermediaries by allowing customers, merchants, and businesses to perform financial transactions.” “This is done using peer-to-peer financial networks that employ security protocols, connectivity, and software and hardware developments.”
The first digital money was Bitcoin. Cryptocurrencies first appeared in 2009, and by 2021, they had surpassed $14 trillion in trading volume.
Cryptocurrency’s rapid technological advancements have been fueled by its large trade volume. According to Bartlett, global and regional regulatory organizations “cannot seem to keep up” with the emergence of innovations, allowing Pyongyang to shift its focus away from traditional financial institutions and toward cryptocurrency exchanges.
North Korea prefers hacking cryptocurrency exchanges over traditional financial institutions, according to Mathew Ha, an analyst at Valens Global, a national security research institute, who told VOA’s Korean Service that the lack of oversight in cryptocurrency exchanges leads it to prefer hacking digital exchanges over traditional financial institutions, such as the Bangladesh Bank, the country’s central bank, where it attempted a billion-dollar heist in 2016.
North Korea laundered more than $90 million in stolen crypto assets in 2021, according to Chainalysis research. The US Justice Department accused three North Korean military hackers in February of that year of orchestrating cyberattacks that resulted in the theft of more than $1.3 billion in cash and bitcoin.
North Korea, according to Ha, confronts difficulties in cashing in its cryptocurrency funds since it must locate a third-party intermediary to arrange transactions. “They’re doing the same [money laundering] tactics,” he claimed, but in a different media.