The Lazarus Group and the Lykke Exchange Theft
The infamous Lazarus Group of North Korea has been implicated in a staggering $22.8 million theft from the UK-based cryptocurrency exchange Lykke, which has led to the platform’s closure and a slew of lawsuits from investors. Authorities from the British Treasury revealed their connection to the cyber heist, highlighting the theft of various cryptocurrencies like Bitcoin and Ethereum from Lykke—a Swiss trading platform that gained a reputation for its commission-free transactions. This incident significantly adds to the growing portfolio of high-stakes raids conducted by Lazarus, which have enabled the North Korean regime to gather billions in funding for its military initiatives, while also evading international sanctions.
Lykke’s Operations and Legal Challenges
Founded in 2015 by Richard Olsen, a descendant of Swiss banking figure Julius Baer, Lykke operated from Zug, Switzerland, a hub for cryptocurrency innovation, while also being registered in the UK. The exchange became known for allowing users to trade cryptocurrencies without transaction fees, but the recent cyberattack derailed its operations completely. According to a report by the Office of Financial Sanctions Implementation (OFSI), the attack was orchestrated by cyber operatives from North Korea, resulting in substantial losses for the exchange and its users.
Post-attack, Lykke’s operations came to a halt in December after the trading platform froze accounts, despite initial assurances of reimbursing customers. The hacked company is now facing legal challenges as over 70 customers have come forward to file a winding-up petition in UK courts, claiming cumulative losses of approximately £5.7 million. Simultaneously, Lykke’s parent company in Switzerland entered liquidation, further complicating matters for founder Olsen, who was declared bankrupt in January.
Cybersecurity Implications and Investigations
The incident has drawn attention from other cybersecurity researchers, with Whitestream, an Israeli firm, also attributing the hack to the Lazarus Group and noting their use of methods to launder the stolen funds via platforms that obscure transactions. However, some experts have cast doubt on the ability to conclusively identify the perpetrators based on current evidence, illustrating the difficulties in tracing the complex world of cryptocurrency crime.
In light of this situation, the UK’s Financial Conduct Authority notably issued warnings about Lykke earlier this year, stating that the company lacked the necessary registration and authorization to provide financial services within the country. Legal documents suggest that Richard Olsen is under investigation for potential criminal activities in Switzerland, but he has thus far not responded to inquiries from the media.
Conclusion
The Lazarus Group’s history of high-profile crypto thefts continues to raise alarm bells as they employ various sophisticated techniques to infiltrate exchange security systems and launder illicit funds through a web of digital transactions. This incident serves as a stark reminder of the escalating risks surrounding cryptocurrency exchanges and the challenges of safeguarding against state-sponsored cybercrime.
