A detailed report has set out the scale to which North Korea is using cryptocurrencies to circumvent economic sanctions – potentially enabling it to continue building and developing weapons of mass destruction.
The Royal United Services Institute (RUSI) says Pyongyang’s “sophisticated cybercrime apparatus enables it to engage in disruptive activity short of actual conflict” – with crypto exchanges across Asia falling victim to hack attacks orchestrated by the North Korean regime.
It was estimated in 2015 that the isolated country has as many as 6,000 cyber warfare experts in employment, but there are fears that this number has grown substantially, with would-be candidates “often selected from schools and trained in cyber operations at university.”
As well as targeting crypto organizations, North Korea has also set about disrupting major financial institutions. The RUSI report cites fears that the country may have even developed malware that can target cash machines in Africa and Asia, enabling it to acquire the funds that it is currently being starved of.
“North Korea’s cryptocurrency activity is increasing in value and complexity and is likely to persist as part of its technology-enabled fundraising and sanctions-evasion activity,” the report warns.
One of the best-known victims of these illicit activities has been Bithumb, the South Korean crypto exchange. As reported by TUNF, the company has now fallen victim to three hack attacks since 2017, with Bitcoin and other cryptocurrencies worth millions taken from accounts.
RUSI’s report outlines three potential reasons why North Korea sees cryptocurrencies as such a powerful tool for evading sanctions. Firstly, stolen funds can often be converted into fiat currency under the cloak of anonymity – enabling them to “finance both permitted and prohibited activity.” Secondly, reserves of cryptocurrency can be stockpiled to fund strategies at a future date. Thirdly, Pyongyang could eliminate the need to convert into fiat at all by “paying indirectly for goods, services and resources that are explicitly prohibited by international sanctions.”
Countries and exchanges around South East Asia are being urged to tighten up regulations and work together to help reduce the risk of falling victim to crypto crime, with the report urging law enforcement agencies to consider “expanding training” so they are better equipped for investigating and stopping crypto-related illicit activity.