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North Korean hackers biggest losers of crypto crash

The crypto currency market crash has wiped out millions of dollars in stolen funds by North Korean hackers, which can potentially threaten a key source of funding for the sanctions-stricken country and its weapons programs.

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Wed, 29 Jun 2022
North Korean hackers biggest losers of crypto crash
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North Korea has been focused on stealing crypto in recent years, and its state-backed hackers carried out one of the largest cryptocurrency heists on record earlier this year.

In March, the FBI blamed hackers linked with the North Korean government for stealing over $600 million in cryptocurrency from a video gaming company among the growing number of cyber heists tied to Pyongyang.

The cryptocurrency markets have seen one of the worst months and years to date and according to associate Professor Elvira Sojli at UNSW Business School, their value has taken a massive tumble, with most of the decrease occurring over the last two months.

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"This depreciation is not unique to the crypto markets although it is more pronounced here.

"Currently, they are following what is happening in the equity market more generally, where the SP500 stock market index has lost 23 per cent in the year to date.

"All markets are getting affected by the increasing interest rates around the world, which makes money more expensive," Professor Sojli said.

Dr Eric Lim, also of UNSW Business School explains that in this case, certain platforms were not transparent with the loans it has been making and has failed to put in sufficient measures to mitigate risks in time of a downturn.

"There is no denying that crypto is having its own 2008 GFC moment.

"Like the Lehman Brothers collapse, this is due to the age-old human story of greed, arrogance, and disregard for the responsibility bestowed upon certain individuals.

"As in any investing space, individuals in the crypto space who made these bad decisions without proper risk management on behalf of managing their clients’ wealth, should be prosecuted to the full extent of the law," Dr Lim said.

North Korea's cryptocurrency holdings have decreased in value from $170 million to $65 million since the beginning of the year, according to New York-based blockchain analytics firm Chainalysis. The firm included funds stolen in 49 hacks from 2017 to 2021.

According to a Reuters report, the rapid crypto crash, which started in May, may affect Pyongyang’s ability to fund its weapons programs, according to two South Korean government sources.

It comes as North Korea tests a record number of missiles, which the Korea Institute for Defense Analyses in Seoul estimates have cost as much as $620 million so far this year.

Nick Carlsen, an analyst with TRM Labs, added that one of North Korea's caches from a 2021 heist, which had been worth tens of millions of dollars, has lost 80-85 per cent of its value in the crypto crash over the past few weeks and is now worth less than $10 million.

According to Reuters, a person who answered the phone at the North Korean embassy in London stated, "he could not comment on the crash because allegations of cryptocurrency hacking are 'totally fake news'".

[Related: The top 8 cyber security predictions for 2022-23 revealed]

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