$3.8 billion in crypto stolen last year, mostly by North Korea

Hackers stole $3.8 billion worth of cryptocurrency last year, surpassing the $3.3 billion record set in 2021 despite a dramatic drop in the crypto market’s value, according to a new report by blockchain analytics firm Chainanalysis. North Korean hackers stole most of it.

North Korea is one of the global hotspots for cybercrime. (Photo: Roman Harak, Flickr, License)Crypto theft peaked in March and October, which alone saw the equivalent of $732 and $776 million stolen.

Sophisticated encryption mechanisms underlying blockchains—public ledgers that record transactions in blockchain networks—make them nearly invincible to hacker attacks.

There are still weak points that can be exploited.

The report said that over 82% of all cryptocurrency was stolen from DeFi protocols, which are sets of codes that facilitate crypto-financial transactions.

Most of these attacks specifically targeted protocols known as cross-chain bridges, which allow transfers between different blockchains and, since they act as large repositories of assets that support the individual transfers, constitute effective “honeypots”.

North Korea, one of the global cybercrime hotspots, was behind the majority of last year’s stolen funds, securing an estimated $1.7 billion worth of crypto, according to Chainanalysis.

Since 2014, when North Korean hackers broke into Sony Pictures in revenge for releasing a comedy that ridiculed Kim Jong-un, they have gained fame for their technical finesse and shrewd operational skills.

The hacker force is apparently built at the behest of the North Korean leadership and operates as an organized unit of the Korean People’s Army.

In 2013, Kim Jong-un described cyberwarfare as an “all-purpose sword that guarantees the North Korean people’s armed forces ruthless offensive capability, along with nuclear weapons and missiles.”

In North Korea, whose annual GDP was estimated to be around $18 billion in 2019, proceeds from cybercrime constitute a significant source of income.

The United Nations has previously reported that some of the stolen funds are used to finance the North Korean military, including its nuclear missile program.

That said, Chainanalysis noted that law enforcement agencies are increasingly able to strike back against North Korean hackers.

In September, US authorities were able to make the first-ever seizure of North Korea’s cybercrime proceeds, recovering more than $30 million from a total of $620 million stolen from the crypto game Axie Infinity.