North Korea’s stores of stolen crypto have plunged in value amid the wider market crash, potentially jeopardizing funding for its weapons programs, according to a report by Reuters.
The country has been linked to numerous cyberattacks targeting crypto, including the $552m hack of play-to-earn game Axie Infinity’s Ronin bridge in March.
In February, a leaked United Nations report suggested that North Korea’s nuclear and ballistic missile programs were funded by crypto. The country’s turn to digital assets came amid harsh sanctions and as other sources of illicit income dried up during the pandemic.
But the country’s crypto gains from the bull run now look to be severely depleted, with two unnamed South Korean government sources telling Reuters that this could affect how Pyongyang funds its weapons programs.
Global sanctions imposed on North Korea due to its nuclear program have made it especially difficult for the hermit kingdom to access other sources of funding.
At an April event in Washington DC, Eric Penton-Voak of the UN Security Council's Panel of Experts on North Korea said cyber activity had been “fundamental” to North Korea’s ability to evade sanctions for years.
However, he noted that the country has become adept at finding new ways to get around attempts to cut off its access to cash.
“The DPRK [Democratic People’s Republic of Korea] is an innovator in finding new sources of illicit income,” he said.
North Korea’s crypto holdings
Though exact details are difficult to come by, blockchain analytics firm Chainalysis told Reuters that North Korea’s old crypto holdings, from hacks between 2020 and 2021, have declined from a value of $170 million at the start of the year to around $65 million at current prices.
Meanwhile, the haul from the attack on the Ronin network, the Ethereum sidechain used by Axie Infinity, is now likely to be worth only a third of its original value.
The Ethereum stolen in that hack, which could have been sold for $552 million at the time, would only be worth about $230 million today, according to Nick Carlsen, an analyst with TRM Labs.
However most of the Ethereum stolen was swapped for Bitcoin, Carlsen told Reuters, making the exact scale of the losses harder to gauge.
Today, the leading cryptocurrencies continue to face extreme volatility. Bitcoin, the largest cryptocurrency by market capitalization, briefly dipped below $20,000 early Wednesday morning, while Ethereum is down nearly 8% and trading at roughly $1,135, according to CoinMarketCap.