"North Korean Coin Thieves Stole 2 Trillion Won in Virtual Assets Last Year"

North Korea Seizes Half of Global Cryptocurrency Hackings
Used for Nuclear Weapons and Missile Development

[Asia Economy Reporter Kwon Haeyoung] Last year, virtual assets worth $3.8 billion (approximately 4.7 trillion KRW) were stolen worldwide due to hacking. The main culprits were North Korean hackers. Organizations linked to North Korea were responsible for stealing nearly half of this amount, totaling $1.65 billion (about 2 trillion KRW) in virtual assets.

On the 2nd (local time), major foreign media including CNBC reported that the U.S. blockchain analytics firm Chainalysis released the "2023 Virtual Asset Crime Report" containing these findings.

The total amount of virtual asset theft last year was $3.8 billion, an increase of $500 million from $3.3 billion in 2021. In October, when the theft amount was the highest, a total of 32 hacking incidents occurred, resulting in the theft of $775.7 million.

The main culprits were North Korean hackers. The report pointed out that North Korea-linked organizations such as Lazarus led the virtual asset thefts. Over the past seven years, North Korea-linked hackers have stolen virtual assets totaling $3.2029 billion.

The scale of virtual assets stolen by North Korea-linked hackers through hacking increased gradually from $1.5 million in 2016 to $29.2 million in 2017, $522.3 million in 2018, $271.1 million in 2019, $299.5 million in 2020, and $428.8 million in 2021. Last year, they stole virtual assets worth $1.6505 billion, which is three times the amount of the previous year. This accounts for 43.4% of the global virtual asset theft volume.

In March last year, the blockchain video game "Axie Infinity" suffered a hacking incident involving $600 million worth of virtual assets, and in June, the blockchain technology company "Harmony" experienced a $100 million hacking incident. The U.S. Federal Bureau of Investigation (FBI) identified North Korea-linked hacker organizations as being behind these attacks.

Facing strong sanctions from the international community, North Korea is turning to virtual asset theft as a means of earning foreign currency. According to the United Nations (UN) and others, North Korea uses stolen virtual assets to fund nuclear weapons and missile development. Following eight intercontinental ballistic missile (ICBM) test launches last year, North Korea is also reported to have completed preparations for its seventh nuclear test.

Chainalysis analyzed, "Considering that North Korea's total exports in 2020 were only $142 million, virtual asset hacking constitutes a significant portion of North Korea's economy."

Virtual asset hackers mainly exploit vulnerabilities in DeFi (decentralized finance) transaction structures to carry out their crimes. Last year, 82% of all hacking incidents targeted such vulnerabilities.

The United States and the international community have entered a war against virtual asset hacking. Strengthening inter-agency cooperation to block money laundering techniques, the FBI has recovered $30 million of the virtual assets stolen from Axie Infinity. Chainalysis stated, "North Korea-linked hackers pose a very sophisticated and clear threat to the virtual asset ecosystem, but the counterattack capabilities of law enforcement and intelligence agencies are also increasing," adding, "As time goes on, virtual asset theft will become more difficult and less productive."