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Last year was remarkably the period of the largest hacks with over $3.8 billion siphoned from the cryptocurrency industry with almost half of this figure connected to North Korea Korean scammers.
According to blockchain analytic firm Chainalysis, North Korean hacking organizations including Lazarus Group which was confirmed to be behind the Harmony Bridge loot were responsible for the loss of $1.7 billion in cryptocurrencies in 2022.
A large percentage of this figure was generated from Decentralized Finance (DeFi) protocols attacks which was a major trend last year. This bounty stolen by the North Korea-linked scammers allegedly made up a significant portion of its economy seeing that the country’s total exports last year were worth around $142 million. There are suspicions that the North Korean government leverages these funds from illicit activities to finance its nuclear weapon program.
The Axie Infinity Ronin Bridge attack was one of the biggest heists in 2022 linked to North Korean hackers. The perpetrator made away with $625 million in cryptocurrency although, Chainalysis claimed to have traced and retrieved $30 million. Notably, this hack was specifically linked to the Lazarus Group.
Crypto Hackers Leverage Tornado Cash
Most of the time, these hackers leveraged other DeFi protocols, and crypto mixers to transfer their bounty and effectively engage in money laundering. As per a published statement by Chainalysis, “In fact, funds from hacks carried out by North Korea-linked hackers move to mixers at a much higher rate than funds stolen by other individuals or groups.”
Crypto mixing platform Tornado Cash was a regular stop for these hackers until it came under investigation and sanction by the United States Treasury Department’s Office of Foreign Assets Control (OFAC) last year for laundering up to $7 billion.
Tornado Cash acted as an identity blocker, taking properly identified and addressed cryptocurrencies into a pool, and then mixing them to ultimately obfuscate their source using the Ethereum (ETH) blockchain.
This sanction eventually reduced its weekly transactional volume, and even North Korean hackers limited their exposure to the sanctioned crypto mixer. A new custodial Bitcoin mixer known as Sinbab became their latest identity blocker.
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