Is North Korea Using Bitcoin To Get Around UN Sanctions?

The latest round of United Nations sanctions against North Korea are designed specifically to prevent Kim Jong Un from obtaining hard currency. Luckily for the Kim regime, there’s always bitcoin.

According to Bloomberg, the isolated country, facing further restrictions on exports that would bring in desperately needed Chinese yuan, has increasingly been turning to bitcoin to circumvent the sanctions.

And to try and keep the illicit digital money flowing, the country has reportedly stepped up attacks against South Korean digital currency exchanges, causing disruptions in one of the largest markets for digital currencies like Ethereum and bitcoin, according to a new report from security researcher FireEye. In addition, the North has managed to breach an English-language bitcoin news website and collect bitcoin ransom payments from global victims of the malware WannaCry attack (although we thought that one had been linked to China?).

“So far this year, FireEye has confirmed attacks on at least three South Korean exchanges, including one in May that was successful. Around the same time, local media reported that Seoul-based exchange Yapizon lost more than 3,800 bitcoins (worth about $15 million at current rates) due to theft, although FireEye said there are not clear indications of North Korean involvement.”

According to Naeem Aslam, a contributor at Forbes, the North cultivated an “army of hackers” to go after digital-currency exchanges after the digital currency’s world-beating gains piqued Kim Jong Un’s interest.

“North Korea has an army of hackers who are constantly targeting South Korea, the hectic trading hub for cryptocurrency. The strategy would aid the country in bypassing many trade restrictions which also include the new sanctions. Moreover, the massive popularity of the cryptocurrency gained Kim’s attention and for crypto traders, this represents an opportunity. A higher demand for cryptocurrency would only boost its price,” said Forbes contributor Naeem Aslam.”

North Korea’s Reconnaissance General Bureau, which directly reports to Kim Jong Un, handles peacetime cyber operations from espionage to network disruptions and employs an estimated 6,000 officers, according to a 2016 report from the International Cyber Policy Centre at the Australian Strategic Policy Institute.

A group within the RGB known as TEMP.Hermit is believed to be responsible for the attacks on the South Korean bitcoin exchanges. FireEye said it has been linked to a 2015 attack on South Korea’s nuclear industry. The hackers have also been tied by other security firms to last year’s attack on Samsung Electronics Co.’s corporate messenger app and the breach of Sony Corp.’s film studio, which the FBI blamed on North Korea.

"They’re pretty capable actors in comparison to other North Korean activity we see,” said Luke McNamara, a researcher at FireEye and author of the new report. "They’ve been creative in how they use their cyber-espionage capability."

And with the US likely to continue to push for still tighter sanctions as the North continues its provocative missile and nuclear tests – that is, until Russia and China finally say “enough” – the isolated country will likely deepen its reliance on the digital currency.

“We definitely see sanctions being a big lever driving this sort of activity,” McNamara said. “They probably see it as a very low-cost solution to bring in hard cash.”

"As more money goes into cryptocurrency exchanges and more people buy bitcoin and ethereum, exchanges become larger targets for this group,” said McNamara. He said so far he did not have evidence that Kim Jong Un’s regime has targeted cryptocurrency exchanges outside of South Korea, but did not rule out the possibility in the future.”

And with so many shadowy digital currency exchanges operating throughout Asia, cashing out the country’s digital currency positions would be easy.

“They could compromise an exchange and transfer those bitcoins to other exchanges elsewhere in Asia or exchange them for a more anonymous cryptocurrency,” said McNamara. “There are variety of things they could do to cash out.”

As Aslam points out, increasing demand for digital currencies from North Korea could ultimately lift prices on a global scale as the country is increasingly forced to transact at in bitcoin, Ethereum and their peers. North Korea isn’t the only country that’s turning to bitcoin out of a sense of desperation. As the Atlantic pointed out earlier this month, thousands of Venezuelans have taken to minería bitcoin – or mining bitcoin – to try and get their hands on precious US dollars.

Because, in some cases, it’s either that, or starvation.
 

North Korea Arrests Another US Citizen, Threatens To Nuke White House And Destroy "Murderous American Ogres"

Exactly two weeks after North Korea arrested Tony Kim, a Korean-American professor in his 50s at Pyongyang International Airport as he was leaving North Korea, Kim Jong-Un has again provoked the US and overnight North Korea detained another U.S. citizen tied to the Christian-backed university in Pyongyang. According to the report issued on Sunday by North Korea’s official Korean Central News Agency, Kim Hak-song was arrested for committing “hostile acts”, and works for the Pyongyang University of Science and Technology (PUST), a university founded in 2010 by James Kim, a Korean-American Christian businessman.

"A relevant institution of the DPRK detained American citizen Kim Hak Song on May 6 under a law of the DPRK on suspension of his hostile acts against it,"KCNA said.

PUST, while not officially Christian, hires largely Christian faculty, and says on its website that “churches can support PUST through prayer and through spreading the news about this project among congregation members.” According to Reuters, the volunteer faculty of PUST, many of whom are evangelical Christians, has a curriculum that includes subjects once considered taboo in North Korea, such as capitalism. The college is an unlikely fit in a country that has been condemned by the U.S. State Department for cracking down on freedom of religion.

Over the past few years, North Korea has arrested a number of U.S. citizens doing Christian-related work in the isolated country. Kenneth Bae, a Korean-American missionary, was sentenced to 12 years’ hard labor for “hostile acts,” and was freed after two years in November 2014. In 2014, American Jeffery Fowle was detained and held for six months after leaving a Bible in a nightclub bathroom, according to the WSJ.

In addition to the two Kims from PUST, North Korea last year sentenced Otto Warmbier, a University of Virginia undergraduate arrested for allegedly trying to steal a political poster from a hotel, and Kim Dong-chul, a Korean-American businessman, to terms of 15 years and 10 years of hard labor, respectively.

White two weeks ago the White House acknowledged it was aware of the US citizen detention in North Korea, it has so far failed to even lodge even a formal demand for his release. It has yet to make a statement on the latest arrest.

Separately, and in keeping up with the recent belligerent rhetoric out of N.Korea, the country again threatened to nuke the White House and reduce it to ashes as Kim Jong-un’s regime bragged the days of the US are now “over” adding "this is a stern warning to the US imperialists and their stooges running amuck for aggression and war moves."

The threat was unveiled in an editorial published by KNCA, in which Pyongyang slammed President Donald Trump’s decision to dispatch its naval fleet to the Korean Peninsula. The op-ed vowed it would be victorious over an enemy made up of “murderous ogres”, “robbers”, “air pirates” and “warriors who master the occult arts”, according to the Express.

“The world will clearly witness how the crime-woven history of the US imperialists will be over, how the despicable remaining days of the south Korean puppet forces will come to an end and how national reunification, the cherished desire of the Korean nation, will be achieved.” North Korea’s military commander also said the White House would be “reduced to ashes”, even as the US was planning to destroy Pyongyang the op-ed claimed.

The article claimed 330,000 US soldiers took part in military drills designed to rehearse an “all-out war” with North Korea and pledged that Pyongyang “will retaliate” and “the crime-woven history of the US imperialists will be over”. North Korea also accused the US of being a “hotbed of evil” which needed to be hit with an “indiscriminate preemptive nuclear strike” to transform the superpower into “something that cannot come back to life again”.

The ongoing threats come as State media said Kim Jong-un has inspected his military"s new battle plans and bragged his forces are "fully ready for combat and to go into action." Chris Douglas of the Australian Strategic Policy Institute warned that “a fanatical regime facing extinction wouldn’t think twice about sending a container bearing a nuclear device to the US or an allied country and detonating it." Luckily, the desperation of the "fanatical regime" has not yet reached peak levels.