North Korean crypto hack surges as bargaining chip in U.S.-North Korea talks

[Financial News] The fallout from North Korean hackers’ theft of cryptocurrency last month has become a diplomatic issue. U.S. President Donald Trump, who is pursuing dialogue with North Korea, announced that he would discuss the issue with North Korean leader Kim Jong Un. The hack, the largest ever, is expected to emerge as a new point of contention in future U.S.-North Korea talks.
■Hack surges as bargaining chip in U.S.-North Korea talksAccording to ABC and other local media, President Trump spoke to reporters at his home in Mar-a-Lago, Florida, on the 31st of last month (local time), saying of the hack, “We’re looking into it. I’m not worried.” He added, “I don’t know whether [those behind it] are North Korean, but if they are, I’ll talk with North Korea about this issue.”
The Federal Bureau of Investigation (FBI) said in a news release that day, “We are announcing that the Democratic People’s Republic of Korea (North Korea) was behind the theft of more than $6 billion in cryptocurrency from Binance.” Earlier, Binance, the world’s largest cryptocurrency exchange, said in an announcement on the 29th that cryptocurrency had been withdrawn from the exchange without authorization in a hacking attack, and that “estimated losses amounted to $6.3 billion (about 8.4155 trillion won).” That figure is the largest loss ever in the cryptocurrency industry. The FBI said the perpetrators were “TraderTraitor,” described as an elite North Korean hacking group, and announced that it had “detected indications that they were converting the stolen assets into Ethereum, another cryptocurrency.”
It is not known when President Trump will raise the hacking issue with Kim. U.S. Secretary of State Marco Rubio said at a press conference on the 31st during the Group of Twenty (G20) foreign ministers’ meeting that “no talks between North Korea and the U.S. have been scheduled yet. There’s nothing to announce about that today.” He stressed, “President Trump’s view is that he is open to it if Chairman Kim is prepared to discuss issues of concern to our allies, such as the United States and South Korea.”
Experts believe North Korea, which has recently been drawing closer to China and Russia, has no reason to engage in talks with the United States right away. Professor Eul-Chul Lim of the Institute for Far Eastern Studies at Kyungnam University said, “Unless the Trump administration makes some concession proactively, the chances of contact or a meeting between the North Korean and U.S. leaders are close to zero.”
■8 trillion won stolen in 20 minutes ... powerless to stop itForeign media focused on the speed and scale of the North Korean hackers’ operation. U.S. cryptocurrency analytics firm TRM Labs estimated that North Korean hackers had stolen a total of $12.8 billion worth of cryptocurrency (about 18 trillion won) in more than 100 hacks since 2017, including this latest incident. On the 31st, The Washington Post (WP), citing people familiar with the matter, reported that the incident began at 4:20 p.m. Eastern Time on the 29th and lasted about 20 minutes. Binance’s senior executives and crisis response team reportedly acted as soon as they became aware of the incident but were unable to stop cryptocurrency from being withdrawn from accounts. Binance said the initial investigation on the 29th suggested that the attack was caused by the hacking of a company technician’s laptop. Binance co-CEO Richard Teng said in a social media statement, “This was a sophisticated attack,” adding, “The attackers used a self-destruct mechanism to destroy tools and traces during the attack, making it even more difficult to track and investigate.” North Korean hackers anticipated that cryptocurrency issuers would freeze the stolen assets and spread them across multiple wallets.
In an announcement on the 31st, Binance said it had worked with other exchanges, blockchain analytics firms, law enforcement agencies and others to track about $3 billion of the stolen assets and recover or freeze them. It also said it had covered 95% of the stolen assets using its own funds and other resources. Binance explained that it could take longer to secure the necessary amount for the remaining 5% because those assets have low liquidity. It also said it would absorb the losses from the hack itself rather than pass them on to customers. Binance added that it would resume cryptocurrency withdrawals in phases starting November 1.
The threat posed by North Korean hacking attacks is not expected to ease anytime soon. In a report on the 31st, the British daily The Telegraph claimed that North Korea has recently been getting numerous North Korean operatives hired under false pretenses in the British IT industry.
[email protected] Park Jong-won, Kim Kyung-soo Reporter