According to researchers, the deepening crypto winter poses a threat to a vital source of funding for Pyongyang’s weapons programs. It is not clear how much crypto the North Korean regime has stashed away over the year, but it is likely to be substantial.
A 70% slump in crypto markets since November will have eroded a large chunk of that digital stockpile, potentially limiting the rogue state’s ability to carry out more weapons tests or fund cybercrime organizations.
Two anonymous South Korean government sources speaking to Reuters on June 28 said the crypto winter had affected North Korea’s ability to carry out more heists and hacks on the sector.
A History of Crypto Hacking
Some of the largest crypto hacks over the past couple of years have been attributed to North Korean hacking groups such as Lazarus. Pyongyang has been pouring resources into funding such hacker collectives, but the dwindling prices of cryptocurrencies may impact its ability to do so.
The group was tied to the largest ever crypto attack in March when more than $620 million was pilfered from Axie Infinity’s Ronin bridge. The Korea Institute for Defense Analyses in Seoul estimates that missile testing has cost North Korea as much as $620 million so far this year.
According to blockchain analytics firm Chainalysis, older crypto wallets controlled by the regime containing funds from hacks between 2017 and 2021 have plunged in value from $170 million to $65 million since the beginning of 2022.
Nick Carlsen, an analyst with TRM Labs, said one crypto cache from a 2021 hack has lost as much as 85% of its value over the past few weeks and is now worth less than $10 million.
Last week, Bloomberg reported that North Korean-backed hackers had stolen as much as $2 billion in crypto over the past decade. Author of a new book called “The Lazarus Heist,” Geoff White, believes the group will keep targeting crypto, especially decentralized finance (DeFi) platforms.
Several of the most recent exploits have occurred on bridges that link different blockchain networks enabling token sharing. Just last week, the Harmony network’s Horizon bridge was exploited for $100 million, but the attackers’ identity has yet to be revealed.