North Korea's missile program partly funded by crypto heists

“The real surge in the last year has been against central crypto infrastructure around the world that hold large sums, like Sky Mavis, leading to more large-scale heists,” Anne Neuberger, who serves as President Biden's deputy national security adviser for cyber and emerging technology, recently stated. These attacks began in 2018 and have continued to escalate, with over 40 successful attacks reported in 2022 alone, as the James Martin Center for Nonproliferation Studies reported. Interestingly, there has also been a rise in missile testing by Kim Jong Un's regime during this period, coinciding with the increase in crypto thefts.

Cryptocurrency hacking

It is a known fact that North Korea has conducted six nuclear tests already, and experts predict that they may conduct the seventh one this year. This is due to the country's determination to further its nuclear weapons program under the leadership of Kim Jong-un. Despite the economic challenges, the country continues to launch a significant amount of ballistic and other missiles, which is a cause of concern. "For context, North Korea's total exports in 2020 totaled $142m worth of goods, so it isn't a stretch to say that cryptocurrency hacking is a sizable chunk of the nation's economy," Chainalysis said in a report on Wednesday.

According to the firm, hackers commonly use "mixers" to launder crypto by blending cryptocurrencies from multiple users to mask the source of the funds. Experts have also suggested that North Korean launders stole crypto via brokers in China and non-fungible tokens (NFTs). In a recent announcement, the FBI confirmed that the Lazarus Group, affiliated with North Korea, was responsible for a $100 million crypto heist on the Horizon Bridge blockchain network in the previous year. According to Chainalysis' report, most cryptocurrency stolen in 2022 came from decentralized finance protocols (DeFi), accounting for more than 82%.

“They were really early into crypto, and they were some of the most advanced users of crypto early on,” said Erin Plante, the vice president of investigations with Chainalysis. Earlier this year, there was a unique hack attack conducted by North Korean-linked hackers. They targeted multiple firms through a cascading supply attack. The hackers infiltrated software companies one by one, infecting a corrupted version of their product that was later downloaded by another company, thereby gaining access to both.