Crypto Crash Jeopardizes North Korea’s Plans as Stolen Coins Lose Value

Paigambar Mohan Raj
Source: Asia-Pacific Leadership Network

The recent crypto market crash has wiped out hundreds of millions of dollars. However, this has also led to a sharp fall in the value of stolen crypto by North Korea.

According to four digital investigators, the decline in the worth of the stolen crypto is becoming a threat to a critical source of funding for the nation under sanctions and its weapons programs.

According to the U.S. Treasury, North Korea has invested significant resources in cryptocurrency theft in recent years, making it a severe cyber threat. The country was involved in one of the largest cryptocurrency heists in March, in which over $615 million was taken. The heist in question is the Axie Infinity Ronin Bridge hack.

Pyongyang’s ability to profit from the above and subsequent heists has been made more difficult by the sharp drop in cryptocurrency values. This may have an impact on how it finances its weapons projects. Due to the sensitivity of the subject, the sources requested anonymity.

How much has North Korea lost in crypto?

According to New York-based blockchain analytics startup Chainalysis, the value of old, unlaundered North Korean crypto assets, which include money taken in 49 hacks from 2017 to 2021, has dropped from $170 million to $65 million since the year’s beginning, the company told Reuters.

According to Nick Carlsen, an analyst with TRM Labs, a U.S-based blockchain analysis company, one of North Korea’s cryptocurrency caches from a 2021 heist, which had been worth tens of millions of dollars, has lost 80% to 85% of its value in the last few weeks and is now worth less than $10 million.

Analysts are hesitant to disclose specifics about the sorts of cryptocurrencies North Korea has since doing so may reveal their probing techniques. Ether accounted for 58%, or around $230 million, of the $400 million that was stolen in 2021, according to Chainalysis.

Chainalysis and TRM Labs track transactions and spot possible crimes using publicly accessible blockchain data. Sanctions monitors have mentioned this activity, and public contracting documents show that both companies cooperate with the IRS, FBI, and DEA, among other U.S. government organizations.

Eric Penton-Voak, the coordinator of the United Nations panel of experts that monitors sanctions, stated at a gathering in Washington, D.C. that cyberattacks have become essential to Pyongyang’s ability to evade sanctions. Additionally, they are also raising money for its nuclear and missile programs, even though it is thought that cryptocurrencies make up a small portion of North Korea’s finances.

Sanctions observers noted in 2019 that North Korea had used hackers to raise an estimated $2 billion for its WMD development.