Cybercurrency Robberies Hit $3.8 billion

Theft of cryptocurrency surged to a new high of $3.8 billion last year, largely the result of North Korean criminal activity.

Blockchain analysis firm Chainalysis Inc. reports that hacking groups tied to the North Korean government stole an estimated $1.7 billion in 2022, a dramatic increase from the $400 million North Koreans are believed to have taken in 2021.

Such funds, stolen through hacking, are a critical source of military funding for the rogue nation, which faces international financial sanctions. About one-third of the funding for Pyongyang’s weapons development programs is derived from digital robbery, according to the National Security Council’s Cyber and Emerging Technology Advisor Anne Neuberger.

Among its numerous hacking techniques, North Korea is known to be behind an app known as Somora that claims to be a safe way to store cybercurrency. In reality, the app is loaded with malware that, once downloaded, gives hackers access to a user’s virtual currency.

More than $3 billion of the digital robberies were from decentralized finance protocols, known as DeFi, in which users hold digital funds in supposedly secure digital wallets, rather than at a financial institutions, and are able to easily transfer the funds online.

Chainalysis’ findings highlight the fact that cybercurrencies are extremely risky and are absolutely not a secure store of value. The digital currencies have suffered from rollercoaster-like volatility, industry bankruptcies, and criminal charges of fraud and money laundering against cryptocurrency leaders.