FBI says North Korean hackers stole more than $600 million in crypto. It becomes more and more obvious that authoritarian countries are getting into crypto. Not to develop it, of course, but to profit from illegal trading, launch crypto scams, avoid sanctions and even fund their weapon programs.
Democrats in the US keep saying that cryptocurrency should be controlled by the government. Obviously because it is extensively used for financial crimes and funding international terrorism, they claim.
That is quite objectable, because still the biggest international financial crimes are committed with traditional fiat money. This includes money laundering, funding terrorism, illegal trading, human trafficking, etc.
But as crypto gains more adoption and recognition worldwide, some countries are actually starting to use it for their dirty stuff.
For instance, the FBI recently caught the traces of North Korea’s regime hackers who stole more than $600 million in a single attack. Vietnamese company Sky Mavis appeared to be the victim of this hack.
Let’s take a look at countries that use crypto for illicit activities, crypto scams etc.
Democratic People’s Republic of Korea
Despite poverty, backwardness, unemployment, and real terror in North Korean society, its government uses high tech to make their crimes.
You might have seen some headlines about their hackers. These guys are pretty much eager to interfere with the west-world online systems, and stealing some data and money, of course.
And, yes, they do use crypto to fund their government.
According to the Chainalysis report, 2021 was the ‘banner year’ for North Korean hackers in terms of stealing crypto. Last year pro-government hackers stole $395 million worth of crypto coins across seven intrusions into cryptocurrency exchanges and investment firms, the report says.
Their total haul over the past five years makes nearly $1.5 billion in crypto alone. They also steal funds from the traditional financial systems.
What is it for? Well, heavily sanctioned, isolated, and with an ailing economy, Kim Jong-un’s totalitarian regime needs to make money somewhere.
Moreover, the country has a huge military sector with nuclear weapons even. These toys need money every day. According to the February UN report, stolen crypto will go for weapons of mass destruction programs. Particularly, for nuclear and ballistic missile infrastructure.
And 2022 is already successful for Kim’s hacker teams: in mid-April, the FBI blamed ‘hackers associated with the North Korean government’ for stealing more than $600 million in crypto from a Vietnamese video gaming company. Remember the recent Axie Infinity hack we’ve discussed? Yeah, that’s it.
For the last years, the Iranian government used to live with tons of sanctions. And they even succeed in trading their oil throughout the world.
But they also using some schemes, including crypto scams, to avoid sanctions and fund their weapon programs.
The country even has one of the world’s biggest mining pools, as Iran accounts for an estimated 4.5% to 7% of the global Bitcoin hash rate. The Iranian government uses crypto to compensate for the total embargo on their banking and oil industries.
The pro is you can take cheap electricity tariffs as you would do mining in Iran. But the con is you also would be required to sell mined bitcoins to the Central Bank of Iran.
The point is that Iranian miners have to deposit their crypto on exchanges specified by the authorities. And then importers can use this crypto as a source of foreign currency to pay for the goods purchased from overseas sellers.
Iran welcomed a lot of Chinese miners since crypto mining was officially banned in China last year.
The experts found that the electricity used by miners in Iran would require the equivalent of around 10 million barrels of crude oil each year to generate. This is around 4% of total Iranian oil exports in 2020.
So you can say that the Iranian government still effectively sells its oil on the global market thanks to Bitcoin mining. And thus effectively bypassing any trade embargoes.
This country became kind of hostile to cryptocurrencies as it recently passed a 30% crypto tax law.
But seemingly it is not an obstacle for the country itself to use all kinds of crypto scams and hacks for its own benefit.
There was at least one big crypto scamming story backed by Indian officials.
The main hero there is 26 years old hacker Srikrishna Ramesh, also known as Sriki, who has claimed to hack the British Virgin Islands-based Bitfinex cryptocurrency exchange in 2015.
The FBI and other US agencies are investigating the theft of 119 754 bitcoins (nearly $5 billion now) from the exchange. And recently Indian Opposition claimed that Karnataka’s Bharatiya Janata Party government has handled cybercrime and is stuck in corruption.
Opposition leaders think that BJP took a bribe from this hacker because recently there was the transfer of 14 682 stolen Bitfinex bitcoins. And Srikrishna is still in custody.
Opposition Party’s spokesperson Randeep Surjewala said the layers of the scam are finally being unearthed and both Amit Shah (Union Home Minister) and Basavraj Bommai (Karnataka Chief Minister) should “reveal how many Bitcoins were stolen and their value, as well as those, involved”.
The FBI came to Delhi at the beginning of April 2022 to “investigate India’s biggest bitcoin scam cover-up under the Karnataka BJP government”, oppositions think.
We know a lot about Russian government-backed hackers. But still, they there aren’t many stories about crypto scams.
They can rig the US presidential election results, or hack European online energy systems. But no crypto. Till now. In recent years Kremlin was strictly against any digital assets or even legal crypto mining. But now official rhetoric turned the other way.
Today Russia thinks that crypto-mining could benefit their economy. And they even proposed a bill to legalize digital assets.
The reason is very clear: sanctions.
After invading Ukraine Putin’s regime went through the biggest economic hit they had since the fall of the USSR. And now the Russian crypto market is booming, because all the people want to save their money withdrawing it abroad.
There are already some authoritarian crypto regulations, like in Iran. For instance, the new crypto bill proposes to harshly restrict stable coins. And the association of banks of Russia called on lawmakers to criminalize storing crypto outside of centralized exchanges on noncustodial wallets.
Isn’t it smell like a new way to get money and used it for prohibited trading?
Surely, the most prominent companies already said that they will ban sanctioned Russians from using crypto. But is it an efficient measure? Especially looking at Iran. At least nobody can cancel direct wallet-to-wallet transactions.
So, yeah, now we can wait for Russia to join the crypto scam countries.
Sources: Wired, CNN, BBC, Reuters, Indian Express, Cointelegraph