Alarms about cryptocurrency hacks rise as authorities retaliate for the theft of $3.7 billion

Alarms about cryptocurrency hacks rise as authorities retaliate for the theft of .7 billion

U.S. officials are intensifying efforts to crack down on hackers and illegal cryptocurrency schemes as a result of the significant development of bitcoin theft over the past several years.

According to TRM Labs, a blockchain intelligence business, only last year alone, crypto hackers succeeded in stealing nearly $3.7 billion in digital assets, with North Korean state-sponsored cyber attackers taking the lead as the primary perpetrator in many of those heists.

Although there have been fewer cryptocurrency breaches this year than there were in 2022, TRM Labs claimed that the first quarter of 2023 saw the theft of around $400 million in virtual money.

North Korean state-sponsored cyber attackers have been actively targeting the cryptocurrency business over the last several years, frequently taking advantage of a market that is underappreciated and poorly regulated.
The United Nations and U.S. government officials have claimed that stolen cryptocurrency money has grown into a significant source of funding for North Korea’s nuclear and ballistic missile programs.

According to Ari Redbord, global head of politics and government affairs at TRM Labs, “the problem has gotten very big and very serious with North Korea cybercriminals accounting for about $1 billion in stolen cryptocurrency last year.”

“With North Korea, it’s not about making money for oneself. The spread of guns and other disruptive behavior is financed by stolen cryptocurrency, according to Redbord, who added that it has turned into a “serious national security threat.”

Similar worries about North Korea’s involvement in cryptocurrency hacking were voiced by a senior cyber officer in the Biden administration.

According to Anne Neuberger, the administration’s deputy national security advisor for cyber and new technologies, the country utilizes “up to a third of [stolen crypto] funds to fund their missile program,” and she expressed alarm about North Korea’s cyber capabilities last year.

According to Neuberger, the administration has made stopping North Korea’s increased missile testing a high priority. To that end, the government has sanctioned criminal organizations and seized stolen digital assets in order to combat the nation’s cyberthreats.

The Lazarus Group, which the Treasury Department had sanctioned for attacking key infrastructure, was found to be responsible for the theft of nearly $620 million in cryptocurrencies from the online game Axie Infinity, the FBI said last year. The Lazarus Group was supported by North Korea.

Hacks on cryptocurrencies have become a serious worry for many people, especially those who invest in them because they run the risk of having their money lost, according to experts.

A hack, according to Redbord, “means the loss of usernames and passwords in the age of the internet.” In the era of cryptocurrency hacks, it may result in the loss of life savings or provide North Korea or other nation-state actors the power to finance nefarious activities.

In order to combat cybercrime, Redbord added that it is now more crucial than ever for regulators and law enforcement to keep up the pace in the digital sphere.

According to Josephine Wolff, an associate professor of cybersecurity policy at the Fletcher School at Tufts University, law enforcement should be concerned about all types of cybercrimes because they are all connected in some way, including crypto hacks, cyberattacks, cyberespionage, cyberwarfare, and disinformation campaigns.

You shouldn’t claim that you solely care about disruptive cyberattacks, Wolff added, because many criminals may fund those operations at least in part through bitcoin crime.

individuals are losing a lot of money as a result of cryptocurrency thefts, and Wolff concurred with Redbord that this is another factor to be concerned about. He said that individuals feel “the impact of this pretty immediately and pretty severely.”

Although North Korea is the world leader in cryptocurrency hacking, analysts stated that Russia has also participated in similar behavior to get around financial restrictions and support initiatives it considers crucial to its national security goals.

“I think that for countries like North Korea and now Russia that face a lot of sanctions, you would imagine that money would be used for just about anything that a government wants to do but has trouble funding,” said Wolff.

Two Russian nationals have just recently been charged by the Department of Justice for taking part in a 2011 breach of the bitcoin exchange Mt. Gox.

The two Russian suspects, according to the agency, were accused of planning to launder around 647,000 bitcoins obtained from the Mt. Gox breach.

Redbord said that Russia, which has been attempting to avoid American economic sanctions, has taken part in a number of cryptocurrency scams. In addition to using paramilitary organizations to gather cryptocurrency funding to assist its conflict in Ukraine, Russia worked with Iran to undertake cross-border cryptocurrency transactions.

While none of these initiatives have significantly shifted the needle, Redbord stated that they may have an effect in the future.

U.S. authorities have stepped up their efforts in recent years to combat cryptocurrency breaches, including sanctioning organizations and cryptocurrency mixers, charging people, and seizing domains.

The DOJ said in March that it had taken down ChipMixer, a darknet cryptocurrency mixer that had been used by fraudsters to launder more than $3 million in digital assets.

The government claimed to have taken control of two domains that led customers to the mixing service, which was also engaged in fraud, malware, cryptocurrency heists, and other hacking operations.

Additionally, Tornado Cash, another cryptocurrency mixer, was penalized by the Treasury Department last year for aiding hackers in transferring more than $7 billion in virtual money.

According to Treasury, Tornado Cash enabled cybercriminal organizations, including those with North Korean support, to use its platform to launder the profits of their crimes.

Wolff stated that while it may be difficult to stop cybercriminals from carrying out these crimes, law enforcement may cut off part of their infrastructure by taking action against illegal cryptocurrency mixers, for example.

The usage of cryptocurrency mixers peaked in 2022, according to a research from blockchain intelligence company Chainalysis, with a major number of users being state-sponsored actors and online criminals.

The research indicated that in 2022, illegitimate addresses received 23% of the money transferred to mixers, up from 12% in 2021.

While hackers continue to advance in sophistication, Redbord noted that law enforcement agencies’ ability to detect and trace money is also improving.

Guest Writer

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