According to blockchain analysis company Chainalysis, hackers supported by North Korea looted $1.7 billion (£1.4 billion) in crypto in 2022. The previous national record for cryptocurrency theft, $429 million in 2021, is almost quadrupled by this.
North Korea using Lazarus’ funds to fund Nuclear weapon programs
Chainalysis described last year as “the largest year ever for crypto hacking.” The windfall accounted for 44% of the $3.8 billion taken in cryptocurrency breaches. According to experts, North Korea is using crypto theft to fund its nuclear weapons because it is under severe sanctions.
Analysts predict North Korea will perform its seventh nuclear test this year, as its nuclear weapons program is growing under leader Kim Jong-un. The nation has already done six nuclear tests. Pyongyang fired an unprecedented number of ballistic and other missiles last year. Despite the nation’s weak economy, this is the case.
To put crypto fraud into perspective, North Korea’s overall exports in 2020 came to $142 million in merchandise, according to the Chainalysis research, published by BBC. According to the company, these hackers frequently employ “mixers” to obscure the sources of the payments by blending Bitcoins from different users as well as using pig butchering scams to trick customers.
Other experts concur, claiming that North Korea uses non-fungible tokens and brokers in China to reroute stolen cryptocurrency (NFTs). The Lazarus Group, greatly linked to South Korea, was in charge of a $100 million cryptocurrency theft on a blockchain network called Horizon Bridge last year, the FBI said last month.
Why the vulnerability to hacks?
According to research by Chainalysis, over 82% of the Bitcoin stolen in 2022 was due to decentralized finance protocols, or DeFi. DeFi customers can utilize their cash confidently because the smart contract codes regulating these protocols are made publicly available by default.
Since the codes are transparent, hackers can scan them for flaws and “attack at the optimum time” to maximize their wealth, which makes DeFi particularly appealing to them, the paper claims.
According to David Schwed, a chief operating officer of the blockchain security company Halborn, DeFi developers “prioritize growth over all else” and frequently divert cash that could be used to improve security to awards to draw users.
To make their systems more secure, DeFi developers may learn from conventional financial institutions, according to Mr. Schwed. He advises that they can create mechanisms to delay or stop transactions when suspicious behavior is discovered or replicate various hacking scenarios to verify their protocols.
He continued that “you may draw from what banks do, but you don’t have to go as slowly as a bank.”
