A senior U.S. government official asked Korea’s financial authorities to take measures to block attempts by North Korea to steal crypto-assets, sources at the Financial Services Commission (FSC) said.
“Sigal Mandelker, who serves as under-secretary of the treasury for terrorism and financial intelligence of the United States, asked FSC Vice Chairman Kim Yong-beom to respond swiftly to counter hacking attempts by North Korea into domestic cryptocurrency exchanges,” a source at FSC said asking not to be identified because he wasn’t authorized to officially speak to the media.
Mandelker visited Korea last week, though it’s unknown whether the visit was mainly aimed at expanding cooperation between the two countries to prevent those in the cryptocurrency sector from becoming facilitators of money laundering and a number of other “criminal activities. ” She reportedly had discussions with officials in China and Japan about the issue during her separate visits to the neighboring countries.
Mandelker was also briefed about details of the latest measures taken by Korean financial authorities to crack down on cryptocurrency trading, said the official. Only investors who passed the identification-screening process are currently allowed to sell and trade crypto-assets here as the anonymous nature of all cryptocurrency transactions is vulnerable to abuse by criminals.
Such requests, which the FSC declined to confirm, came at a time when cybersecurity experts warned that the North has “master-minded” a growing number of crypto-heists in the last few years as the North’s regime hungered for capital to bankroll its nuclear weapons program and circumvent tough international sanctions.
The official said the authorities’ recent decision to mandate a real name-based cryptocurrency trading system was based on its beliefs that cryptocurrencies need to be properly regulated because they are speculative assets, not financial products.
“If North Korea steals cryptocurrencies and transfers them into overseas cryptocurrency exchanges, a real name-based transaction system makes tracking them much easier,” said the FSC source.
The National Intelligence Service (NIS), Korea’s top spy agency, said it has recently begun investigating the possibility that North Korean hackers stole an estimated $500 million worth of cryptocurrencies from the Japanese exchange Coincheck, according to a lawmaker who attended a meeting with the head of the NIS on Feb. 5.
Kim Byeong-ki of the country’s ruling Democratic Party said the Coincheck hacking has some similarities with previous cases which are associated with the North’s cyberattack apparatus.
Last year, North Korea’s “cybercriminals” began focusing their priority on cryptocurrencies as part of efforts to get funds for the regime.
The first officially reported North Korean hacking of a top-tier Korean cryptocurrency exchange Bithumb happened in February last year. About $7 million worth of cryptocurrency was hacked from the exchange at that time. Yobit declared its bankruptcy after 17 percent of its total assets were stolen. North Korea was suspected of the theft.
Korea is cooperating with China and Japan regarding an issue on how to further regulate cryptocurrency markets. FSC Chairman Choi Jong-ku said finance ministers from the three countries agreed to go over their separate findings and exchange ideas about the issue.