Introduction
Recent reports indicate that North Korean cybercriminals have pilfered approximately $2 billion from centralized cryptocurrency exchanges in the last year. Notably, security expert Tay Monahan highlighted that around $1.8 billion of these funds can be traced back to significant hacks on platforms such as Bybit, DMM Bitcoin, WazirX, Phemex, and BingX.
Methods and Strategies
Despite facing challenges like asset freezes and transaction costs, this hacking group is estimated to have successfully laundered over $1.5 billion, benefitting the North Korean regime. Monahan suggests that, even factoring in an optimistic 15% loss due to penalties, the total remains substantial compared to North Korea’s GDP, which is under $30 billion.
A study by TRM Labs has unveiled that these hackers utilized covert banking systems in China to transfer funds globally, skillfully navigating around international sanctions and minimizing detection risks. To mask their activities, they executed a convoluted series of transactions, frequently employing decentralized exchanges, blockchain bridges, and crypto mixers.
The process usually culminates in the use of over-the-counter (OTC) brokers, allowing the regime to convert cryptocurrency into fiat currency with limited oversight.
The Rise of Cybercrime in Cryptocurrency
The proliferation of cybercrimes in the crypto world has drawn attention from analysts like ZachXBT, who refers to this spike in organized theft as a crime supercycle in the digital asset arena. He argues that while cryptocurrency has historically attracted illicit activities, the situation has escalated following the rise in meme coin promotions and the discontinuation of various legal actions.
Although blockchain technology does promote transparency, ZachXBT points out that inconsistent law enforcement provides a haven for hackers. He noted that the efficiency of laundering operations and OTC brokers in obfuscating stolen funds is growing, especially in light of the recent hacks on exchanges.
In light of the increasing nefarious actions occurring on the Tron blockchain, he speculated that the black market associated with these activities could be valued around $10 billion.
Regulatory Oversights
ZachXBT has also criticized regulatory bodies for a lack of action against influencers promoting fraudulent schemes, which not only fosters an environment of impunity but also diverts regulatory attention from genuine breaches of the law. He remarked that government agencies could have potentially reaped between $50-100 million in fines from influencers and projects that failed to declare paid promotions, an oversight that remains largely unaddressed across many jurisdictions.
