Chainalysis, what is a blockchain analysis firm, has reported some cyberattacks by North Korean hackers. According to the firm, hackers have carried out at least seven cyber attacks against platforms where cryptocurrencies are bought and sold in 2021. With these attacks, the hackers who organized the attacks carried out the theft of approximately 400 million dollars worth of crypto money. In the report, it was stated that the main targets of the attacks were generally Western investment firms.[1]
However, the United Nations (UN) has accused North Korea because of organizing cyber attacks in the past both in order to avoid sanctions imposed on it and to finance its nuclear and ballistic missile systems.[2]
As a matter of fact, although the theft of cryptocurrencies is a relatively new phenomenon for North Korea, the Pyongyang Government has been facing various accusations in terms of cyber attacks from the past. For example, in 2016, North Korean hackers stole about $81 million from the Bangladesh Central Bank. Moreover, they came on the verge of stealing an amount of approximately 1 billion dollars; but it was not successful.[3]
Along with all this, North Korea has been described as responsible for the cyber attacks on Sony Pictures,[4] a film company, in 2014, and the WannaCry attack, which was felt in more than 150 countries in 2017 and caused billions of dollars worth of damage to banks, hospitals and companies.[5]
In addition, there are claims that the numbers in question have increased in 2022 and that North Korea has gone further in terms of crypto money theft. At this point, North Korean hackers started using Decentralized Finance (DeFi) protocols. DeFi protocols are generally defined as decentralized finance protocols that aim to solve the problems in the traditional financial sector, created with special autonomous computer programs in line with this goal.[6] Because, according to the 2022 data published by TradingPlatform.com, North Korea is responsible for the theft of approximately 1 billion dollars worth of crypto money through these platforms only in 2022.[7]
The claims regarding North Korea and their economic and political justifications can be examined on three main points. The first of these is the sanctions targeting the Pyongyang administration. North Korea is isolated by the West due to both posing a very high nuclear threat and the risk it poses to global security. As a result, North Korea cannot find a place for itself in the global supply chain. This causes need for financing.
Moreover, North Korea is also a major nuclear power. It feels a serious need for financing both in terms of financing its nuclear power and not succumbing to sanctions. Therefore, assuming that the claims are true, it can be said that the Pyongyang administration, which is excluded from the global economy, generates a significant economic income from illegal methods.
In this context, why crypto assets are preferred is the second issue that needs to be examined. Because, as mentioned before, hackers, who are the perpetrators of these thefts, use DeFi protocols. Because crypto assets are called “decentralized finance” assets. The decentralization of these assets makes it difficult to trace and reduces their security. This makes assets preferable targets for theft that may occur as a result of cyber-attacks compared to more traditional and centralized exchange types.
In addition to all this, another reason why the decentralized nature of the crypto market makes it more criminal-proof is that it is difficult to track. As a matter of fact, this makes it difficult to prove any crime that may occur. All the accusations made against North Korea at the moment remain at the level of allegations precisely for this reason. Although the existence of some evidence strengthens the allegations in question, the Pyongyang Government can easily reject the arguments put forward. In other words, the decentralized nature of the cryptocurrency market makes very difficult to trace, which makes the crypto market a more obvious target for illegal activities compared to traditional markets.
The third issue to be examined here is the framework of propaganda and power. As a matter of fact, it can be said that the cyber attacks allegedly carried out by North Korea, in addition to financial reasons, are a propaganda and show of power against the West. For example, Pyongyang’s alleged cyber-attack on Sony in 2014 has no financial consequences. This attack took place while Sony was preparing to release a comedy movie called “The Interview” in which North Korean Leader Kim Jong-un was criticized. In this process, the Pyongyang administration denied that it was the perpetrator of the attack, but announced that the perpetrators might be sympathizers of North Korea.[8] This indicates that Pyongyang is turning to this method not only for financial but also for propaganda purposes.
As a result, North Korea is a country that has been known for cyber attacks for many years. The most important of these are the allegations made over crypto money theft. In the analysis made by assuming that the claims are true, it is seen that both the exclusion of the Pyongyang administration from global markets and the decentralized structure of crypto assets are decisive.
[1] “North Korea Stole $400 Million of Crypto in 2021, Report Says”, Bloomberg, https://www.bloomberg.com/news/articles/2022-01-14/north-korea-stole-400-million-of-crypto-in-2021-report-says?leadSource=uverify%20wall, (Date of Accession: 10.12.2022).
[2] “North Korea: Missile Programme Funded Through Stolen Crypto, UN Report Says”, BBC News, https://www.bbc.com/news/world-asia-60281129, (Date of Accession: 10.12.2022).
[3] “Explained: The Story of How North Korea hackers Stole $81 Million from Bangladesh Bank”, The Indian Express, https://indianexpress.com/article/explained/bangladesh-bank-robbery-north-korea-lazarus-heist-7375441/, (Date of Accession: 10.12.2022).
[4] “The 2014 Sony Hacks Explained”, Vox, https://www.vox.com/2015/1/20/18089084/sony-hack-north-korea, (Date of Accession: 10.12.2022).
[5] “North Korean Regime-Backed Programmer Charged With Conspiracy to Conduct Multiple Cyber Attacks and Intrusions”, The United States Departman of Justice, https://www.justice.gov/opa/pr/north-korean-regime-backed-programmer-charged-conspiracy-conduct-multiple-cyber-attacks-and, (Date of Accession: 10.12.2022).
[6] “Decentralized Finance Versus Traditional Finance: Key Differences”, Bloomberg, shorturl.at/pANY5, (Date of Accession: 10.12.2022).
[7] “DeFi Protocols Lose Almost $1 Billion in Crypto to North Korea-Linked Hacking Groups”, Interesting Engineering, https://interestingengineering.com/innovation/defi-protocols-lose-almost-1-billion-in-crypto-to-north-korea-linked-hacking-groups, (Date of Accession: 10.12.2022).
[8] “The 2014 Sony Hacks Explained”, Vox, https://www.vox.com/2015/1/20/18089084/sony-hack-north-korea, (Date of Accession: 10.12.2022).
