Bitcoin North Korean War Efforts Funding: What’s The Latest Story?

One of Bitcoin's oft-cited value propositions is that it is a borderless currency. The world has never known such a currency or commodity. Could this novel, still poorly understood instrument of exchange, which makes policing intractable, also turn out to be a blight on world peace?

North Korean Threat

Following WWII, the Korean peninsula was divided into two and the communist North developed into a totalitarian state. Since them, ostracism from the rest of the world has given rise to a siege mentality with its leaders seeking nuclear capabilities to thwart an outside world determined to destroy it.

According to North Korean claims, it has successfully tested a hydrogen bomb – many times more powerful than an atomic bomb – that can be miniaturised and loaded on a long-range missile. Although analysts have been skeptical, US intelligence has confirmed this to be true. It is estimated that North Korea has carried out more than 80 missile tests under the current regime of Kim Jong-un.

UN Sanctions

The United Nations(UN) has imposed various sanctions on North Korea since its first nuclear test in 2006. The sanctions include prohibition of export to North Korea of military supplies and luxury goods, shutting out the country from the international financial system, export of rare earth metals, minerals, textiles, crude oil and petroleum products.

On December 22, following a North Korean TV broadcast of a new ballistic missile test capable of reaching Washington DC, the United Nations Security Council voted unanimously to impose even tougher sanctions which included measures to reduce the nation's petrol imports by up to 90%. China and Russia, the country's major trading partners, voted in favour of the resolution.

The US ambassador to the UN, Nikki Haley, said the sanctions sent an “unambiguous message to Pyongyang that further defiance will invite further punishments and isolation.”

Target Bitcoin

Until April this year, North Korea was targeting banks all around the world, being linked to attacks on banks in 18 countries, according to a report from Russian cybersecurity firm Kaspersky. The same hacking entity, known as “Lazarus Group”, is turning its attention to bitcoins and cryptocurrencies.

In May 2017, WannaCry ransomware cyber-attacks infiltrated hundreds of thousands of computers around the world. What did they want as ransom? Bitcoins. Wonder why? In August, after the bitcoins were moved from the attacker's wallet, cybersecurity firm Symantec said it was likely that North Korean hackers were behind the attack.

On December 19, US government said it had assessed with a “very high level of confidence” that Lazarus Group, which works on behalf of the North Korean government, carried out the WannaCry attack.

Earlier this week, South Korean cryptocurrency exchange Youbit lost 17% of its digital assets in a second hack within eight months and filed for bankruptcy. South Korean law enforcement is currently investigating the heist as North Korea is yet again strongly suspected, as it was in the first attack when 4000 bitcoins were stolen.

Bitcoin Bailout

Bitcoin is not entirely anonymous but a security expert with sufficient knowledge can anonymously handle and launder bitcoins without raising the slightest suspicion.

The North Korean regime has gotten so serious about hacking bitcoins lately that it has employed 1,700 state-sponsored hackers, backed by more than 5,000 support staff, according to the Australian Strategic Policy Institute. Evidently, they’re getting good at their craft!

For a country considered persona non grata, insulated in a shroud of mystery from the world around it, without recourse to essential resources or access to the economy outside its own borders, a borderless, traceless currency is the perfect refuge.

Cybersecurity firm CrowdStrike's CEO George Kurtz says companies dealing in bitcoin and cryptocurrencies should be wary of North Korean hackers fixated on hoarding a cache of cryptocurrency loot, “It’s an anonymous currency, it can easily bypass any sort of sanctions because there are none on bitcoin, and the value has increased dramatically. It’s the perfect currency for North Korea to be hoarding.”

It should be interesting to see how the UN handles the new developments, especially the bailout avenue facilitated by bitcoin, as tensions escalate with a growing sense of inevitability looming in the shape of a nuclear war.