South Korea has recently made headlines by accusing North Korea of being behind a significant cyber theft that occurred in 2019. This incident involved the hack of Upbit, a prominent cryptocurrency exchange, leading to the loss of a substantial amount of digital currency.
Details of the Heist
According to the South Korean National Police Agency, hackers managed to steal 342,000 ETH from Upbit, which was valued at approximately $41.5 million at the time. As of now, the worth of these stolen assets has surged to over $1 billion, categorizing it as one of the most significant crypto heists linked to North Korea. The police announced these findings in a statement released Thursday, emphasizing their thorough investigation.
Investigation Techniques and Findings
The South Korean authorities conducted an in-depth analysis of various factors to attribute the crime to North Korea. This included examining IP addresses associated with the hack, analyzing the flow of virtual assets, and identifying specific terminology unique to North Korean operations. Their conclusion was substantiated by collaborative efforts with the U.S. Federal Bureau of Investigation (FBI). This marks a pivotal moment as it is the first instance where South Korea has directly connected North Korean entities to a cryptocurrency theft.
Following the theft, it was revealed that approximately 57% of the stolen ether was laundered through a series of transactions converting it to Bitcoin at favorable rates across three exchanges set up by the perpetrators. Additionally, the remainder of the funds was dispersed across 51 various overseas platforms to obscure the trail of the funds.
Recovery Efforts and Broader Implications
In a joint initiative with Swiss authorities, South Korea successfully recovered 4.8 BTC, which was traced back to a cryptocurrency exchange based in Switzerland. The ongoing cybercrime activities of North Korea have been an ongoing concern for the FBI, which has previously linked North Korean hackers to major cryptocurrency crimes, such as the $100 million breach of the Harmony Horizon Bridge and the $600 million attack on the Ronin Bridge.
The FBI has also issued warnings about North Korea’s increasing focus on exploiting vulnerabilities within the Web3 industry to siphon off digital assets. As part of a proactive approach, South Korea’s Foreign Ministry announced training programs for ASEAN counterparts to combat North Korea’s cyber theft activities.
South Korea’s Changing Attitude Towards Crypto
Amid these cyber threats, there is a notable shift in South Korea’s financial landscape, particularly among the younger generation. A recent survey indicated that many young South Koreans are losing faith in the national pension system. More than three-quarters of individuals aged between 20 and 39 expressed distrust in state-issued pensions, with a significant number opting to invest in stocks and cryptocurrencies instead to secure their financial futures.
Furthermore, it has been reported that even political candidates in South Korea have a presence in the cryptocurrency market, with about 7% of them owning digital assets as per asset disclosures. This interest aligns with the ruling Democratic Party of Korea’s (DPK) recent announcement regarding the implementation of cryptocurrency taxation set to begin in January 2025, marking a shift in governmental stance toward digital currencies.
This taxation was originally planned for January 2022 but faced substantial pushback from investors and industry experts, leading to multiple delays. Discussions have even considered additional postponements, suggesting a potential start as late as 2028, reflecting the tensions and complexities surrounding cryptocurrency regulations in South Korea.