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How North Korea is Using Bitcoin to Defeat UN Sanctions

Jacob Wohl

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Several reports have surfaced that suggest North Korean hackers are running a highly sophisticated cryptocurrency operation in order to usurp sanctions and amass a war chest of liquid financial assets.

Unlike major superpowers like the United States and China, North Korea has no major central bank with the ability to print money that holds any value. Alternatively, they’ve turned to building a full scale hacking, mining and laundering operation to essentially print cryptocurrency out of thin air.

It’s unknown how long Pyongyang has been developing this cryptocurrency operation, but it does appear to be highly effective. According to a research report from cybersecurity firm FireEye Inc., which is famous for their involvement in working for the Clinton Foundation, since April 2017, there has been major hacks of South Korean cryptocurrency stashes.

Another disturbing development is that the timeline of North Korea’s amassing cryptocurrency seems to correlate with the rally in bitcoin and ethereum.

South Korean intelligence has verified that North Korea runs what it calls an ‘army of hackers’ that aim to commit serious hack attacks that aim to steal cash and cryptocurrencies. Rather than traditional state-sponsored cyber armies, which traditionally focus on committing espionage and being able to paralyze the infrastructure of their enemies, North Korea’s focus remains on stealing monetary assets.

North Korea’s Reconnaissance General Bureau, which directly reports to Kim Jong Un, handles cyber operations from espionage to network disruptions and employs an estimated 6,000 officers, according to a 2016 report from the International Cyber Policy Centre at the Australian Strategic Policy Institute.

South Korea is the most frequent target for North Korean targets. Experts believe that this is because of their proximity and shared language with the North. Intelligence reports have suggested that English and other foreign language practitioners are few and far between in North Korea.

Seoul based Bithumb, the world’s largest exchange for Ethereum, said in June that it had been a victim of a hack that had stolen customer information from an employee’s computer. It would stand to reason that this attack was committed by North Korea.

North Korea’s signature hacking strategy is known as spear-phishing, where mass emails are sent to high value targets that contain malware designed to take sensitive information from their targets.

The true scale of North Korea’s hacking capabilities, and how they are being applied to cryptocurrencies is just beginning to be comprehended by intelligence agencies. It is possible at this point that North Korea’s hackers may just be their own version of a central bank, except rather than printing money, they are stealing it.

If North Korea is able to successfully amass a war chest of Bitcoin, it would enable them to have two strategic capabilities. On one hand, they could use the currency to make payments to China and Russia for crude oil and other supplies, with the need for traditional banking institutions. On the other hand, they would possess a financial weapon of mass destruction if they were able to manipulate the price of currencies.

If it turns out to be the case that North Korea has a massive cache of cryptocurrencies, that could allow them to completely nullify any international sanctions, which generally operate by identifying and freezing traditional bank accounts and traceable financial assets.

Jacob Wohl is the CEO and Head of Fixed Income and Interest Rates for Montgomery Assets, a proprietary trading and asset management firm based in Los Angeles, CA. Jacob Wohl is the host of the Offended America Podcast

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