Saturday, February 15, 2020

What North Korea really wants to achieve with its cryptocurrency conference

Key facts:
US authorities UU. and the UN have opposed the conference scheduled in the North Korean capital.
North Korean activist groups have been singled out for ransomware cyber attacks.

The blockchain conference scheduled for next week in Pyongyang, North Korea, seems unlikely to be held, given that United States authorities and regulators of the United Nations Organization have sent a clear message saying no The transfer of expertise to the Democratic People's Republic of Korea on cryptocurrencies and the technology associated with blockchain will remain unpunished.

The uncertainty surrounding the event stems from the repercussions of a similar conference held in 2019 in Pyongyang.

The 2019 conference, which took place last April, resulted in the arrest of Virgil Griffith, an American citizen and developer of Ethereum, who gave a presentation on blockchain technology in Pyongyang, despite having received warnings from the FBI of Don't do it The southern district of New York accused Griffith in early June with a charge of conspiring to violate the International Emergency Economic Powers Act. Griffith is currently free on bail awaiting trial.

The plans for a repetition of a conference in 2020 attracted a rapid response from the United Nations Organization which, according to the publication of a medium, based on a confidential report, indicated the event as a possible violation of the sanctions

Since then, the conference website has been removed. The organizers have not given answers to emails where they are questioned about their status. One of the organizers noted on the website of the 2019 conference, Chris Emms of Coinstreet Partners, replied through the Telegram messaging application notifying that he is no longer involved in the conference. "I am not involved and I am not organizing it at all," Emms said.

With the fate of the event in doubt, experts are debating whether there would be complicated international efforts to restrict North Korea's ability to finance its nuclear program. Over the past three years, the North Korean regime has proven very competent in the implementation of cryptocurrencies, both for criminal activities and for those that are not. Therefore, some analysts argue that there is little that a developer like Griffith can teach North Korean regime officials about money laundering and evasion of sanctions.

"I don't think the developer was sharing any surprising insider information," said Kayla Izenman, a research analyst at the Royal United Service Institute (RUSI) in London. "It is quite obvious that North Korea knows what it is doing with cryptocurrencies."

A history of cyber attacks

According to Izenman's own investigation at the Center for Crime and Security Studies in RUSI, North Korea has successfully used cryptocurrencies as a source of income and as a money laundering tool, at least since 2017.

In May of that year, pirates affiliated with North Korea deployed the Wannacry attack that initially hit hospitals in the United Kingdom, but then went around the world in five days. Wannacry's worm took computer hard drives hostage, but offered victims the opportunity to retrieve information in exchange for bitcoins.

North Korea has also sought other sources of income related to cryptocurrencies. One of the most lucrative has been a series of piracy attacks that have been carried out against online exchange houses, which usually maintain large amounts of cryptocurrencies. Izenman's research indicates that the regime has been particularly successful in hunting for low-security exchange houses in South Korea. "In fact, they have been tremendously successful in what they have done, and this has been, I would say, with relatively little effort," said Izenman.

Incursions in cryptocurrency mining

Research indicates that the North Korean regime has also been mining cryptocurrencies, both for use in illegal transactions today, or to accumulate them for future use. A report published last week by the cybersecurity company, Recorded Futures, found that since 2018 North Korea has increased its mining activities of the monero cryptocurrency tenfold.

Monero is a cryptocurrency focused on privacy that hides the identity of its users, making it difficult, if not impossible, to track transactions. After Wannacry, the hackers changed the bitcoins coming from the attack by moneros, and at that point, the researchers lost track of the funds.

"Following money is the absolute key to any influence on Kim's regime," said Priscilla Moriuchi, one of the authors of the Recorded Futures report and a senior member of the Belfer Center for Science and International Affairs at Hardvard. "Where cryptocurrencies come in and what comes out of that chain is absolutely key."

Propaganda tool

To the extent that the North Korean regime finds ways to enter cryptocurrencies, they will also need ways to liquidate them. To do so, it depends on regional cryptocurrency exchange houses that operate under the radar. According to Izenman, there are many to choose from.

"This is just a big weak point," Izenman said. “In some places, exchange houses do not have to carry out comprehensive due diligence because there are no regulations by governments. In other places they do not have to do them because the established government regulations are not applied. Some exchange houses simply do not comply with regulations. There are many holes in the entire system. ”

However, Moriuchi noted that there is a broader issue at stake. “It's not just cryptocurrencies that have changed the game. It is the total militarization of the internet, ”he said. “The things that the State of North Korea is doing, getting involved in blockchain development, mining cryptocurrencies, doing IT work, scamming players, robbing banks. These are all things that other countries are starting to emulate. ”

So why would a country, which itself is the hosting center for the largest number of cybercriminals worldwide, need to hold a conference on blockchain technology? Izenman suggests that the event could work more like a propaganda tool instead of a technology transfer tool.

"What they want is the attention offered by the fact that they are holding a conference and being able to receive Americans and say, 'Look, we have a boy from Ethereum talking to us about cryptocurrencies and how we can avoid sanctions.'" Izenman added.