In 2022, North Korean hackers stole a staggering $1.7 billion of cryptocurrency – quadrupling the country’s prior record for crypto theft in 2021 at $429 million. Shockingly, this amasses to 44% of the entire amount stolen from cryptocurrencies worldwide last year; according to blockchain analysis firm Chainalysis, it was “the biggest year ever for crypto theft.”
North Korea Turns To Cryptocurrency Theft To Fund Its Nuclear Program
Despite the country’s economic downturn, North Korea has been accelerating its nuclear weapons program under leader Kim Jong-un. Last year alone saw a record number of ballistic and other missiles launched by Pyongyang. As sanctions have hindered their traditional means of funding, experts believe that crypto theft is now being utilized to support the development of their nuclear arsenal – with analysts anticipating yet another test this year.
Chainalysis stated in their report on Wednesday that, with only $142 million of goods exported by North Korea in 2020, it’s safe to assume that crypto theft is an immense contributor to the nation’s economy. Reportedly, hackers often use “mixers” to mix cryptocurrencies from many different users to disguise the source of stolen crypto. Additionally, other authorities have declared that North Korea launders its stolen digital assets via brokers in China and Non-Fungible Tokens (NFTs).
DeFi Platforms Are The Biggest Targets Of North Korean Hackers
Just last month, the FBI uncovered that North Korea-backed Lazarus Group was behind a crypto theft of $100 million on Horizon Bridge’s blockchain network in 2022. Moreover, Chainalysis’ report indicated that 82% of all cryptocurrency stolen this year stemmed from DeFi protocols.
With DeFi protocols, users can be confident that their funds are accurately managed as the smart contract codes behind these systems are accessible to everyone. While this visibility aids transparency for users, hackers may take advantage of it by scanning the code for potential weaknesses and exploiting them at a time most profitable for themselves.
According to David Schwed, COO of blockchain security provider Halborn, DeFi developers prioritize growth over safety. To draw more users and incentivize them with rewards, funds that should be earmarked for improved security are reallocated elsewhere instead.DeFi developers should take inspiration from traditional financial institutions to fortify their platforms, as proposed by Mr. Schwed. For instance, they can simulate malicious attack scenarios to test the effectiveness of their protocols or introduce mechanisms that pause or halt transactions upon detecting suspicious activity. “You don’t need to move at a snail’s pace as banks do,” he said, “However, you can still draw on some of the experiences and practices employed in established banking systems.”
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