Cryptocurrency has become Kim Jong Un’s lifeline and Russia’s secret weapon

Cryptocurrencies earn the Democratic People’s Republic of Korea (DPRK) billions of dollars worth of foreign exchange every year, according to a new report from the Multilateral Sanctions Monitoring Team (MSMT), a mechanism that monitors and reports on violations of United Nations sanctions.

The report says this is one of North Korea’s most stable ways to earn foreign currency, at least from 2022 onwards, and helps Russia obtain North Korean-made munitions and weapons.

This sanctions evasion and the use of cryptocurrencies to launder and abstract financial movements appears to directly contribute to Russia’s ability to wage war against Ukraine.

In the early days of the Russo-Ukrainian war, cryptocurrencies were highlighted as a way to donate hundreds of millions of dollars to the Ukrainian war effort.

However, it has proven to be far more beneficial to Putin’s government and North Korea, according to MSMT, which found that “North Korean officials were using stablecoins…for procurement-related transactions, including the sale and transfer of munitions and raw materials such as copper used in military production.”

Read more: North Korea likely put Lazarus to work days after warship debacle

The report specifically highlights the usefulness of Tether (USDT) to the Kim regime, stating that “since at least 2023, North Korea’s 221 General Directorate… and other North Korean officials have sought to expand North Korea’s use of cryptocurrencies beyond cybercrime, to include the use of cryptocurrencies as a form of exchange and payment for goods and services.”

“This includes the use of USDT in procurement-related transactions.”

The only major contribution of foreign currency to North Korea is through the Putin regime’s direct sales of ammunition and weapons to Russia. Utilized on the front lines in Ukraine.

Cryptocurrency is contributing significantly to North Korea’s economy

At this point, it is impossible to argue that North Korea does not rely heavily on cryptocurrencies, not only as an intricate part of its overall economy, but also as the lifeblood of the Kim regime.

MSMT provides a useful step-by-step guide to what North Korean hackers and IT workers are doing to obtain US dollars, Chinese yuan, and Russian rubles.

IT workers in China are being forced to open bank accounts and obtain debit and credit cards so they can transact in renminbi.

The process of cryptocurrency laundering includes Ether (ETH), Bitcoin (BTC), DAI, USDT, and the coins created by Justin Sun TRON (TRX) and USDD.

Other coins, tokens, and NFTs have undoubtedly been hacked, stolen, and utilized by North Korean operatives, but they play a less significant role.

China has also played a role in the rise of cryptocurrencies and Kim’s economic growth. Specifically, fake IT workers across mainland China are planted to obtain Chinese bank accounts and obtain UnionPay debit/credit cards so they can transact in RMB.

Protoss contacted UnionPay for comment, but received no response.

What is clear is that Kim and his team of spies, hackers, and weapons manufacturers rely on illicit profits from cryptocurrencies. Produce enough weapons each year to meet the needs of the Russian military And pour more money into the coffers of the Kim family and the Workers’ Party of Korea.

Read more: SBI Cryptocurrency Pool Allegedly Loss $21 Million – North Korea Suspicion

Thanks to centralized cryptocurrencies and exchanges

While the report also discusses how “North Korea is able to move funds at lightning speed, making it difficult to recover after a robbery occurs,” it also devotes a significant amount of time to how centralized cryptocurrencies and exchanges will be forced to cooperate with authorities, and what governments and citizens need to do to protect themselves from phishing attacks and hacks.

The report states that “in many situations, blockchain technology allows issuers and exchanges to freeze cryptocurrency assets on the blockchain, and once frozen, some law enforcement agencies can seize those assets…The platform’s reputation for responsiveness to law enforcement agencies may deter its use by North Korean actors.”

While this may be an opportunity for law enforcement, it remains an obstacle for decentralized exchanges and cryptocurrencies, uncooperative centralized organizations like USDD, and mixers such as: Wasabi Wallet, CryptoMixer, Tornado Cash, JoinMarket, and Railgun.

There is no solution

While the MSMT report sets out protocols and warning signs to follow, there appears to be little concrete way to stop North Korea from continuing to uncover multi-million and billion-dollar exploits within the cryptocurrency industry.

Some concepts mentioned in the report that may concern investors and supporters include, but are not limited to:

• Recommendation 4: Maintain and develop capabilities to track cryptocurrency transactions. Develop and enforce legal authorities to freeze and seize cryptocurrencies stolen and laundered by North Korea to enforce asset freezes.
• Recommendation 5: Require cryptocurrency-related services to provide and maintain valid contact information and respond appropriately to government notifications of North Korean targeting or abuse to prevent and disrupt North Korean cyber activity.
• Recommendation 11: Identify and monitor cryptocurrency exchanges, swap services, mixers, bridges, and cross-chain aggregators that are consistently used by North Korean cyber actors to transfer cryptocurrencies in violation of asset freezes.

Not only has North Korea been able to infiltrate multiple cryptocurrency exchanges and companies, but it also has thousands of IT workers in both remote and in-person roles, particularly in numerous industries across China.

North Korea employs thousands of workers in numerous industries across China.

Read more: North Korean hacker posing as developer exposed in ‘I hate Kim Jong Un’ test

MSMT offers several recommendations for new hires in remote areas to avoid North Korean agents. This includes, but is not limited to:

• Verify all identifying information provided by remote workers
• Monitor the use and installation of remote management tools and restrict them to unverified employees
• Prevent remote IT employees from using commercial VPNs to access corporate networks

And there is something that is sure to upset crypto investors and supporters alike.

• Avoid paying workers in cryptocurrencies.

Despite efforts to sanction and isolate North Korea, military sales, Russian and Chinese aid, and cryptocurrencies have been more than enough to keep Kim Jong-un wealthy, healthy, and unopposed.