Japan Loses $721M To North Korean Crypto Hackers; US Is Third Worst-Hit Nation: Report

Japan has suffered cryptocurrency losses worth $721 million since 2017 due to cyberattacks carried out by numerous hacking groups affiliated with North Korea. The United States was third on the list with $497 million in losses.

The amount is equal to 30% of the total losses of over $2.3 billion sustained by businesses in different countries globally, a study by blockchain analytics firm Elliptic found.

The study, commissioned by Japanese financial publication Nikkei, analyzed cryptocurrency attacks that originated in North Korea between 2017 and 2022. The findings raised concerns over the overall security of the region as it pointed out that the targeted crypto assets were used by North Korea to obtain foreign currency for its missile programs.

"Pyongyang is believed to have targeted the crypto assets of other countries to obtain the foreign currency that it uses for its missile program. This could, in turn, threaten the security of Asia," the report said.

North Korea has been facing difficulty in obtaining foreign currency in the wake of international sanctions imposed on the country. Elliptic described cyberattacks as a "national strategy meant to make up for the loss of foreign exchange from North Korea's greatly restricted coal trade."

The blockchain analytics firm analyzed two main types of cyberattacks used by North Korea – hacking and ransomware. It said Pyongyang is focusing its efforts on direct attacks on exchanges to access crypto assets.

Apart from Japan, hackers targeted Vietnam – both are seeing rapidly expanding cryptocurrency markets but have lax security. Vietnam lost $540 million in such attacks since 2017, followed by the U.S. ($497 million) and Hong Kong ($281 million).

"At least three cryptocurrency exchanges in Japan are thought to have been broken into by North Korean hackers between 2018 and 2021," a person familiar with the situation told the analytics firm.

The $721 million stolen from Japan is 8.8 times greater than the value of North Korea's exports in 2021, according to the Japan External Trade Organization.

North Korea's Lazarus Group is one of the biggest hacker groups in the world, perpetrating some of the largest crypto heists, including the Ronin Bridge exploit and the Harmony Bridge hack, according to CoinTelegraph.

North Korean hackers stole more crypto assets in 2022 than in any other year, according to a United Nations report. It found that North Korean-linked hackers stole crypto assets worth $630 million to over $1 billion last year after targeting networks of foreign aerospace and defense companies.

"[North Korea] used increasingly sophisticated cyber techniques both to gain access to digital networks involved in cyber finance and to steal information of potential value, including to its weapons programs," independent sanctions monitors said in its report to the UN Security Council Committee.

The latest report comes as international institutions are working on countering the cyberattack threat emerging from North Korea. Last week, G7 finance ministers and central bank governors issued a statement, extending support to measures aimed at regulating crypto assets and countering illicit activities by state actors, such as crypto-asset thefts.

"We commit to implementing effective regulatory and supervisory frameworks for crypto-asset activities and markets as well as stablecoin arrangements, which are consistent with the FSB's recommendations and standards and guidelines established by SSBs (Standard setting-bodies)," the statement read.