In a major development within the world of cryptocurrency and cybercrime, White House officials have confirmed that roughly half of the funding for North Korea’s various missile programs is being sourced through the theft of cryptocurrencies. The announcement details a heightened level of co-operation between North Korea and its regional partners, in order for Pyongyang to procure large sums of stolen funds with relative impunity.
The situation highlights the ease with which cryptocurrencies are able to circumnavigate SWIFT banking regulations, allowing for illicit funds to be more easily moved into North Korean accounts. Moreover, the wealth of cyberwarfare capabilities possessed by the North Koreans makes it easy to acquire these assets without dealing with intermediaries or alerting authorities.
1. White House: North Korea’s Missile Programs Funded by Stolen Crypto
The White House issued an official statement Thursday morning accusing North Korea of funding their missile programs with millions of dollars of stolen cryptocurrencies.
According to the South Korean news agency Yonhap, the White House statement detailed a months-long effort by North Korea to steal from South Korean crypto exchanges and wallets. The statement indicated that at least four South Korean cryptocurrency exchanges – Bithumb, Coinis, Youbit, and Corbit – had been targeted with cyber-attacks. It added that North Korea had stolen an estimated 70 million South Korean won (US$53 million) worth of cryptocurrencies.
The statement went on to accuse the North Korean government of using the stolen funds to finance the country’s missile programs. It also called on “all responsible nations” to work together to enforce financial sanctions against North Korea.
The incident highlights the growing threat of cybercrimes targeting cryptocurrency exchanges and wallets. The White House urged users to take extra precautions when storing digital currencies online, such as using multi-signature wallets and enabling two-factor authentication.
2. North Korea Tapping Into Crypto to Fund Illegal Activities
Senate Moves to Minimize North Korea’s Crypto Activity
The U.S. Senate recently approved an amendment to the National Defense Authorization Act that would require the Department of Defense to develop a framework for minimizing North Korea’s access to digital currencies and digital assets. According to evidence from various organizations, the country has been using digital currencies and blockchain technology to fund illegal activities and circumvent sanctions imposed by the United Nations.
The amendment specifies that the department has to provide details on the policy actions that could be taken, as well as coordinate with other agencies to address the criminal activities of North Korea’s government. In addition, the proposal suggests using existing sanctions as an effective way to disrupt the country’s “enabling financial infrastructure”, which includes digital wallet services, payment providers, and marketplaces.
Reports of North Korea’s illicit activities have been in circulation for the past several years. The U.N Panel of Experts confirmed the country’s use of cryptocurrency to finance the counterfeiting of US dollars and avoidance of international sanctions prohibiting the export of weapons. Additionally, it’s believed that North Korea has launched an array of crypto-related scams, as well as cyber-attacks aimed at stealing funds from cryptocurrency exchanges.
In an effort to actively pursue North Korea’s malicious behavior, the Senate is expected to deliberate on the International Cybercrime Prevention Act, which seeks to strengthen the information security of the U.S. against advanced foreign adversaries like North Korea. The act would require companies to report on any knowledge of cyber-related activities and violations of national security, as well as impose sanctions on those who intentionally provide aid or services to malicious actors. With the Department of Defense taking the lead in responding to North Korea’s activities, it’s hoped that the next steps taken will help minimize the country’s involvement with digital currencies.
3. Global Implications of Stolen Crypto Funding Missile Programs
Cryptocurrencies are having a major impact on the global political and economic landscape, with the potential to be used for illicit activities to fund rogue missile systems. Governments around the world are concerned about stolen crypto funds being used by their enemies to purchase powerful new weapons.
Most countries have not yet established regulations to control the use of cryptocurrencies, which can leave them extremely vulnerable to criminal activity. For example, North Korea is thought to have stolen more than $2 billion in cryptocurrencies and used them to finance missile programs.
Russia is one of the countries leading the charge to take control of the situation. It is reportedly launching a global cryptocurrency initiative to contain the situation and to better understand the implications of crypto and blockchain for missile programs.
The sharp increase in stolen crypto funding for missile programs is deeply concerning, and experts argue that governments should take measures to protect their citizens from the potential threat of rogue weapons. Countries must work together to create regulations and oversight, as well as to create technological solutions to prevent and detect illicit activity with cryptocurrencies. Authorities also need to strengthen existing institutions and financial systems in order to reduce the possibility of criminal interference.
4. U.S. Taking Action To Stop North Korean Crypto Thefts
US Department of Justice and the FBI Crack Down on North Korean Cyberattacks Targeting Crypto Exchanges
The US Federal Bureau of Investigation (FBI) and the Department of Justice (DoJ) have taken action to disrupt a foreign-state sponsored campaign of malicious cyber activities targeting US and international companies, organizations and individuals in the crypto exchange sector and other industries.
The action, which includes criminal charges against two Chinese nationals, underscores the US government’s commitment to protecting domestic and foreign networks from state-sponsored cyberattacks. The charges also send a strong message that malicious cyber activities from foreign actors will not be tolerated.
The two charged individuals, Tian Yinyin and Li Jiadong, are accused of conspiring to launder stolen cryptocurrency from North Korean-linked illegal activities. According to an indictment unsealed by the DoJ on October 15th, the pair laundered more than $100 million dollars in cryptocurrency from five North Korean-affiliated hacks between 2017 and 2019. They allegedly used a variety of techniques to obscure the origin of funds, hide the ill-gotten gains, and transfer them through various countries.
Moreover, the indictment alleges that Yinyin and Jiadong employed tactics such as exploiting digital currency services and acquiring prepaid debit cards in order to facilitate conversions of digital currency into fiat currency. In addition, they allegedly managed their funds and exploited digital wallets, engaged in “tumbling” and “mixing” services, as well as used intricate network of shell companies to cover their tracks.
The US government is taking substantial measures to tackle illegal cyber activities by foreign entities. In June, 2020 the US Department of the Treasury imposed sanctions on three North Korean actors that are said to be behind these illegal activities. With these recent actions, the US is committed to defending the US financial system and protecting its economy from cybercrime.
The US White House’s allegations towards North Korea suggests that there is an alarming and growing level of sophistication in their attempts to violate U.S. laws and international treaties. This puts into perspective the monumental challenge of maintaining global security measures and the task of preventing the further proliferation of weapons of mass destruction. Whilst the extent of North Korea’s involvement in attempting to use stolen cryptocurrencies to fund its missile programs has yet to be established, the international community must take heed of these warnings in order to help prevent the further destabilization of global conflict.