On-chain sleuths have linked the latest attack on Indian cryptocurrency exchange WazirX to North Korea-based cybercriminals, the latest in a series of coordinated attempts by groups present in the East Asian nation to bleed the growing industry.
After blockchain analytics firm Elliptic's preliminary inquiry, which tied the $230 million exploit to North Korea, on-chain detective ZachXBT suspected the involvement of the notorious Lazarus Group.
North Korean hackers have long tormented the cryptocurrency space, stealing a whopping $2 billion over the last two years, according to analytics firm Chainalysis.
Benzinga talked to experts to understand why the industry has become a soft target for these unscrupulous players.
‘A Tool To Circumvent Financial Sanctions’
Stephanie Talamantez, a former FBI agent, and currently the Managing Director at security consultancy firm Guidepost Solutions, told Benzinga that these are nothing but financially motivated crimes that exploit the relative ease of cryptocurrency transfers.
"These hacks enable North Korea to swiftly acquire funds while circumventing imposed restrictions and sanctions," Talamantez stated.
She added that the FBI has been relentlessly pursuing Lazarus Group, the syndicate believed to be behind many of the high-profile cryptocurrency hacks, but faces challenges in acting against the perpetrators due to the sanctuary provided by the North Korean government.
"These hacks are state-sponsored activities, and there have been many published reports that these hackers are recruited and trained from an early age," the former FBI officer said. “They are believed to be part of a grand internal vision for the future of strengthening North Korea's economy.”
These assertions are not unfounded, as even the U.S. government claims that the illegal proceeds from the thefts are used to fund North Korea's weapons and missile program.
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Lack Of Regulations To Blame?
Dr. Michael Skiba, an international expert on financial crime and fraud, said the cryptocurrency industry remains at the top of Lazarus Group's list as they see it as a low-risk, high-reward endeavor.
Skiba, who is currently the Criminal Justice Program Director at Colorado State University Global, blamed the industry's regulatory landscape in part for its undoing.
"The Lazarus Group employs very sharp IT people who have a high degree of expertise in cryptocurrency, as it is very unchartered ground as far as regulation, law enforcement jurisdiction, and penalties are concerned."
The vulnerabilities of the cryptocurrency space were acknowledged by people working within the industry as well.
Jared Grey, CEO of Sushi Labs, linked to the decentralized exchange SushiSwap, admitted that the pseudo-anonymity, decentralized nature, and high value of cryptocurrencies have made it an attractive target for North Korean groups.
These insights set the stage for deeper discussions at the upcoming Benzinga Future of Digital Assets event on Nov. 19.
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