Cryptocurrency theft: In 2022, hackers with ties to North Korea stole $1.7 billion

The previous national record for bitcoin theft was $429 million in 2021; this nearly quadruples that amount.

The business described last year as “the largest year ever for crypto hacking,” and the windfall accounted for 44% of the $3.8 billion taken in cryptocurrency breaches.

According to experts, the nation is using crypto theft to fund its nuclear weapons because it is under severe sanctions.

Analysts predict that North Korea will perform its seventh nuclear test this year, as the nation’s nuclear weapons program is advancing under leader Kim Jong-un. The country has already conducted six nuclear tests. Pyongyang fired an unprecedented number of ballistic and other missiles last year. This is true despite the nation’s weak economy.

Considering that North Korea exported $142 million worth of commodities in 2020, it is reasonable to assume that the country’s economy is significantly impacted by cryptocurrency hacking, according to a report released on Wednesday by Chainalysis.

According to the company, these hackers frequently employ “mixers,” which combine bitcoins from different users to conceal the source of the payments.

According to some analysts, North Korea uses non-fungible tokens and brokers in China to resell stolen cryptocurrency (NFTs).

The FBI announced this month that the Lazarus Group, which has ties to North Korea, was behind a $100 million cryptocurrency theft on the Horizon bridge blockchain network in 2017.

According to a research by Chainalysis, over 82% of the cryptocurrency stolen in 2022 was due to decentralized finance protocols, or DeFi.

DeFi customers can use their cash with confidence because the smart contract codes governing these protocols are by default made publicly available.

Since the codes are transparent, hackers can scan them for flaws and “attack at the optimum time” to maximize their wealth, which makes DeFi particularly appealing to them, the paper claims.

According to David Schwed, chief operational officer at the blockchain security company Halborn, DeFi developers “prioritize growth over all else” and frequently divert cash that could be used to improve security to awards in order to draw users.

In order to make their platforms more secure, DeFi developers can learn from conventional financial institutions, according to Mr. Schwed.

For example, they can create mechanisms to delay or stop transactions when suspicious activity is discovered or replicate various hacking scenarios to verify their protocols.

You can borrow from what banks do, he continued, but you don’t have to move as slowly as a bank.