Bitcoin and other cryptocoins have plummeted over the past few weeks. This isn’t just a problem for private investors — it’s also a problem for the North Korean regime’s weapons programs.

It is with spectacular raids that North Korea’s hackers have developed from small-time crooks into one of the greatest cyber threats in the world in recent years. The regime benefited greatly from this. But now it faces a major financial challenge.

With the crash of the crypto market, the loot from the digital robberies also melted considerably, reports the Reuters news agency, citing sources in the South Korean government. This is a real problem for dictator Kim Jong-un: The crypto revenue is considered the most important source of funding for his nuclear weapons program.

Shrinking prey

The losses are immense. Chainalysis, a company specializing in movements in crypto networks, has spent months monitoring coins that have been stolen, attributed to North Korea’s hacks, but have not yet been laundered by specialist services. These crypto coins alone were originally valued at $170 million. After the crash, only 65 million remained. The loot from a single heist is said to have lost 80-85 percent of its value alone, instead of more than 50 million, it is now said to be worth less than ten million dollars.

The crash hit Kim Jong-un’s regime at a sensitive stage. Since the beginning of the year, North Korea has increased its missile tests enormously. That costs: This year alone, the otherwise financially strapped state has already squandered 620 million dollars, according to South Korean government agencies. And that despite the fact that the internationally largely isolated country is already shaken by Covid and an economic crisis. Should the hackers no longer suffice as a source of income for the program, the regime would have to rethink, South Korea believes. And find the wherewithal from other sources.

Little risk, huge profits

The crypto heists had brought a steady stream of revenue to the regime in recent years. While the country was long laughed at because of its isolated position on the internet, this soon turned out to be an advantage. Because the country is largely isolated from the World Wide Web, it doesn’t have to worry too much about counterattacks – apart from spectacular exceptions. “For North Korea, it’s a cheap, low-risk but highly profitable criminal business,” a South Korean counterterrorism expert told the New York Times.

After a rather simple start-up phase, North Korea’s hackers like the Lazarus Group (learn more here) have developed increasingly sophisticated methods of bringing digital currencies into the country through blackmail or robberies on crypto exchanges. In some cases they were extremely successful. The attack on the blockchain system Ronin alone took currency worth 615 million dollars in March. Today, however, the booty would only be worth $230 million in ether currency.

North Korea is going ahead

Cryptocurrencies have been plummeting for the past few weeks. While the highest value of the most well-known currency Bitcoin was just under 60,000 euros per coin in November, it has continued to fall since then – the other currencies have followed the same trend. During two particularly strong crashes in May and June, bitcoin alone lost almost half of its value almost overnight, other currencies were hit even harder and were suddenly worthless. With a value of around 18,000 euros, Bitcoin is currently less than a third of its maximum value.

So far, however, North Korea seems to be just going on as before. Just a week ago, coins worth almost 100 million euros were stolen by a US company in an attack on the Horizon Bridge service of the Harmony Blockchain. Experts think they know the pattern of the following money laundering attempts. “This looks very much like what North Korean hackers are known to do,” Nick Carlsen, a former FBI investigator who now specializes in crypto tracking, told Reuters. If that were true, North Korea would likely have robbed more than $1.1 billion since the beginning of the year — roughly 60 percent of all cryptocurrencies stolen.

Sources: Reuters, New York Times, Chainalysis

Also read:

How Kim Jong Un’s cyberarmy brings millions to the regime

False flag attack: Google exposes North Korea’s clever hacking campaign

“Hidden Cobra”: FBI launches attack against North Korea’s hackers – and is breaking new ground

Bitcoin and iTunes vouchers: This is how North Korean hackers wash their loot of millions