North Korea reportedly stole over $1 billion from the cryptocurrency sector last year through the activities of the Lazarus Group.
So far this year, over a third of all cyber-related attacks on cryptocurrency businesses have the North Korean Lazarus Group behind them, according to a report by the Council on Foreign Relations.
High profile hacks
North Korea’s interest in cryptocurrency is no secret. The country has been linked to a number of high-profile hacks and thefts of digital assets, including the $81 million heist of Bangladesh’s central bank in 2016 and the $250 million hack of Japanese cryptocurrency exchange Coincheck in 2018. However, it’s not just illicit activities that are driving North Korea’s cryptocurrency craze.
Recent reports suggest that the country is increasingly turning to digital assets as a way to evade international sanctions and earn hard currency. The U.S. government has taken notice, with Treasury Secretary Steven Mnuchin warning that “we will not allow digital asset service providers to operate in the shadows.”
North Korean interest in cryptocurrency
But what exactly is driving North Korea’s interest in cryptocurrency? One factor is the relative anonymity of digital transactions, which makes it easier for the country to move money across borders without detection. Additionally, many cryptocurrency exchanges operate outside of traditional financial systems, making them less likely to be subject to the same types of sanctions and regulations that traditional banks are.
However, it’s not just the illicit potential of digital assets that is appealing to North Korea. The country is also looking to tap into the growing global market for cryptocurrency and blockchain technology. North Korea has a large pool of highly skilled computer scientists and engineers, and the country’s government has made a concerted effort to build up its capabilities in these areas.
In fact, North Korea has even begun to hold its own cryptocurrency conferences, which attract participants from around the world. These conferences are not only an opportunity for the country to showcase its own capabilities, but also to learn from others and potentially make valuable business connections.
Avoidance of sanctions
North Korea’s growing interest in cryptocurrency and blockchain technology is a worrying development for the U.S. and its allies. Not only does it give the country new ways to evade international sanctions, but it also raises the possibility of North Korea using digital assets to fund its military and nuclear programs.
The U.S. government has taken steps to address this threat, including imposing sanctions on North Korean individuals and entities linked to cyber attacks and cryptocurrency theft. However, it’s clear that more needs to be done to address the broader challenge posed by North Korea’s cryptocurrency craze. This includes greater international cooperation to track and disrupt illicit digital transactions, as well as efforts to build up the resilience of the global financial system to withstand potential attacks.
Balancing act
The U.S. government will have to navigate a tricky balancing act as it addresses the challenge posed by North Korea’s cryptocurrency craze. On one hand, it must take steps to disrupt illicit digital transactions, but on the other hand, it must also be mindful of the potential benefits that blockchain technology and digital assets can bring, and not unduly stifle innovation in these areas.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.