\n<\/p>\n
Since the world\u2019s second-largest crypto exchange, FTX,\u00a0declared bankruptcy<\/a>\u00a0earlier this month, the\u00a0flow-on effects<\/a>\u00a0have been felt\u00a0far and wide<\/a>.<\/p>\n But among the many victims are also some not-so-innocent parties. For the Democratic People\u2019s Republic of Korea, a country facing heavy sanctions, cryptocurrency theft has been a (relatively)\u00a0simple way<\/a>\u00a0to fund the country\u2019s expanding nuclear arsenal.<\/p>\n It\u2019s well\u00a0documented<\/a>\u00a0that Kim Jong-un\u2019s military operation hackers have been\u00a0stealing cryptocurrency<\/a>\u00a0to support North Korea\u2019s\u00a0nuclear and missile program<\/a>\u00a0for several years.<\/p>\n But with the general downturn in the crypto market, coupled with the recent FTX collapse and myriad\u00a0other pitfalls<\/a>, analysts estimate North Korea has probably lost most of its\u00a0crypto haul<\/a>.<\/p>\n Can we expect its nuclear weapons development to come to a halt, or slow down? It seems unlikely.<\/p>\n North Korea sponsors several hacker groups, including\u00a0Lazarus Group<\/a>\u00a0(also called Guardian of Peace and Whois Team) and Advanced Persistent Threat 38 (APT38<\/a>).<\/p>\n While nobody knows exactly how many North Korea-backed hackers there are, experts\u00a0have estimated<\/a>\u00a0Kim Jong-un has between\u00a06,000 and 7,000<\/a>\u00a0working both inside and outside the country.<\/p>\n North Korea has invested in its national cybercrime arsenal\u00a0for some 15 years<\/a>. It\u2019s almost impossible for an organisation to defend itself against an army of this size and calibre once it comes charging.<\/p>\n In 2016, Lazarus hackers came close to\u00a0stealing US$1 billion<\/a>\u00a0from Bangladesh\u2019s national bank \u2013 but a typo in the computer code meant they only got away with US$81 million.<\/p>\n Since then, they\u2019ve refined their methods. Lazarus has been accused of stealing\u00a0US$571 million<\/a>\u00a0from cryptocurrency exchanges between January 2017 and September 2018,\u00a0US$316 million<\/a>\u00a0from 2019 to November 2020, and US$840 million in\u00a0the first five months<\/a>\u00a0of 2022.<\/p>\n According to Chainalysis, North Korean hackers have\u00a0stolen an estimated<\/a>\u00a0total of about US$1 billion in cryptocurrency this year. A large chunk of this would have come from Lazarus\u2019 massively lucrative heist against NFT-based online game Axie Infinity. In April, US authorities held the group responsible for stealing\u00a0US$620 million<\/a>\u00a0in cryptocurrency from the game.<\/p>\n For context, it\u2019s\u00a0estimated<\/a>\u00a0North Korea only earned about US$142 million from trade exports in 2020.<\/p>\n It\u2019s difficult to say exactly how much cryptocurrency has been stolen (and used) by North Korean hackers \u2013 and therefore how much might remain.<\/p>\n In June, blockchain analyst and former FBI analyst Nick Carlsen\u00a0told Reuters<\/a>\u00a0one of North Korea\u2019s crypto caches had lost 80% to 85% of its value in a number of weeks, falling to less than US$10 million.<\/p>\n Losses will have intensified following the FTX collapse. According to a\u00a0Chainalysis report<\/a>, in January North Korea held about US$170 million in stolen unlaundered cryptocurrency, taken from 49 hacks conducted from 2017 to 2021. It also claims Ether was the most common cryptocurrency stolen by North Korea in 2021, making up 58% of the total theft.<\/p>\n Ether\u2019s value<\/a> fell by more than 20% following the FTX crash, and remains low. It\u2019s reasonable to expect North Korea will wait before cashing out. When it does, experts looking on will be in a better place to figure out how much it has.<\/p>\n The United States, South Korea and Japan\u00a0have been warning<\/a>\u00a0North Korea against conducting a seventh nuclear test. But Kim Jong-un doesn\u2019t seem to be letting up. On Saturday, at the launch of North Korea\u2019s largest ballistic missile yet, he\u00a0told state media<\/a>\u00a0the:<\/p>\n ultimate goal is to possess the world\u2019s most powerful strategic force, the absolute force unprecedented in the century.<\/p>\n<\/blockquote>\n International sanctions and border closures due to COVID-19 have made it difficult for North Korea to trade and generate funds through other means \u2013 which makes the cryptocurrency market an attractive target.<\/p>\n Cryptocurrency remains unregulated by most countries\u2019 governments. At the same time, transactions can be made quickly, and allow more anonymity than transactions made through traditional banking systems.<\/p>\n It\u2019s also easier to hack a cryptocurrency exchange than it is to hack a bank. The latter are almost always bolstered by advanced security barriers and sometimes require in-person appearances.<\/p>\n The rapid drop in crypto\u2019s value, compounded by the FTX crash, will have certainly left a dent in North Korea\u2019s nuclear military expansion funds. Nonetheless, Kim Jong-un\u2019s cybercriminal army will likely find new sources of illicit income (and will probably keep stealing crypto too).<\/p>\n North Korea\u00a0has<\/a>\u00a0also\u00a0had<\/a>\u00a0financial support<\/a>\u00a0from supporters in South Korea who follow the \u201cJuche\u201d ideology \u2013 the same Marxist-Leninist-adjacent political philosophy imposed in North Korea.<\/p>\n And in April American crypto expert Virgil Griffith\u00a0pleaded guilty<\/a>\u00a0to helping North Korea evade US sanctions through using cryptocurrency.<\/p>\n Then there\u2019s China \u2013 a key player in deciding whether sanctions against North Korea will actually work. In May, China joined Russia\u00a0in vetoing<\/a>\u00a0a draft proposal from the US to tighten sanctions against North Korea, and continues to\u00a0trade with it<\/a>.<\/p>\n As long as North Korea can glean financial benefit from China, and other avenues as mentioned above, it\u2019s unlikely to stop its plans.<\/p>\n<\/div>\n !function(f,b,e,v,n,t,s)What North Korea\u2019s hackers have been up to<\/strong><\/h3>\n
Okay, so how much has it now lost?<\/strong><\/h3>\n
Why steal crypto to fund nuclear weapons tests?<\/strong><\/h3>\n
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No more missile tests, for now?<\/strong><\/h3>\n
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