It’s tough to maintain a healthy national economy when most banks on the planet won’t accept your business.
That’s the dilemma facing North Korean leader Kim Jong-un, as mounting economic sanctions cut his country out of the world economy. To stave off the looming financial crisis, Kim has turned to what may be the nation’s best hope: Bitcoin.
The popular cryptocurrency is attractive because of its decentralized nature. Rather than relying on banks or individual governments, bitcoin (and other cryptocurrency) is built on a distributed network of users controlling verified transactions. It’s “internet money,” essentially, uncontrollable by any single actor.
There’s no comprehensive accounting of just how much Bitcoin North Korea holds, but its recent exploits have shown a consistent interest in the cryptocurrency. There’s even some evidence that North Korea has started mining their own Bitcoin.
When you’re the leader of a heavily sanctioned country, then, loading up on decentralized currency is particularly attractive. It gives you some liquidity without having to rely on banks that either can’t do business with you, legally, or that may be in a position to freeze your assets at a later date, should additional sanctions come into play.
And so, North Korea has spent the last few years building up an investment in bitcoin.
What if North Korea invented bitcoin? Kim as Satoshi? 🤣
— taavet hinrikus (@taavet) December 2, 2017
Back in April, news emerged that the country had stolen a hefty pile of of the cryptocurrency between 2013 and 2015. At the time, the 73 bitcoins were valued at roughly $88,000; in today’s market, with the value of bitcoin soaring, that same amount is worth more than $1.26 million.
“Cyber-criminals have turned to bitcoin for money as it is very difficult to track them down,” Choi Sang-myong, of the South Korean cybersecurity firm Hauri, said at the time. “North Korea [has] jumped on the bandwagon of bitcoin extortion since around 2012.”
North Korea has also turned to more indirect forms of theft as it seeks to amass a bitcoin war chest. In July 2016, the country’s hackers absconded with the data of more than 10 million users from Interpark, an online auction and shopping site. That data was then held for ransom, with North Korea demanding $2.7 million in bitcoin.
“Cyber-criminals have turned to bitcoin for money as it is very difficult to track them down.”
Interpark said at the time that it was cooperating with police, and no payoff was made. But it’s useful again to look at the relative value here: In July 2016, the price of a single bitcoin hovered at around $650; $2.7 million worth at the time would have equated to more than 4,000 bitcoins. That same number of bitcoins now would be worth more than $71.8 million.
More recently, North Korean hackers are believed to have turned to ransomware, which is essentially a computer virus that demands payment in exchange for restored access to your data. Remember, too: Access to the internet is strictly limited in North Korea. It is exceedingly unlikely that something as data-intensive as cryptocurrency could happen without the influence of Kim’s government.
Earlier this year, the WannaCry ransomware made headlines around the globe, hitting multiple countries and services. The perpetrators demanded large bitcoin payments. It is widely believed that Lazarus, the group behind the attack, counts North Korean hackers among its members, and that WannaCry originated there.
Several months after the May 2017 attacks, three bitcoin wallets known to contain ransom paid to the WannaCry hackers were emptied. The total came to roughly 52 bitcoins, an amount that is currently worth just under $900,000.
This speaks to another important point: There is protection inherent in the anonymity of bitcoin ownership. While it’s possible to track how bitcoin is moving around, there’s no reliable way to suss out the identity of who owns it.
In the case of the WannaCry ransom, three wallets emptied into multiple other wallets, which then emptied into other wallets. Eventually, the increasingly scattered ransom payments found their way to ShapeShift, a cryptocurrency exchange. It’s a form of high-tech money laundering, providing a degree of protection that capitalizes on the decentralized nature of a currency like bitcoin.
While North Korea has denied any wrongdoing, the country has shown an interest in cryptocurrency. In November, the Pyongyang University of Science and Technology — a prestigious school for North Korea’s ruling elite — hosted a lecture by Professor Federico Tenga, an expert in the field.
“He explained in detail the fundamentals of Blockchain Technology and then spoke of its most notable application -Bitcoin,” the university’s website reads. “Many excellent technical questions were asked about the inner working of Bitcoin, its risks, and the measures taken to ensure security.”