South Korea has officially accused North Korea of being behind the 2019 hack of the Upbit cryptocurrency exchange, which led to the theft of 342,000 ETH, initially valued at $41.5 million. The stolen funds are now worth over $1 billion, making it one of the largest crypto heists attributed to North Korea, according to the South Korean National Police Agency’s announcement on Thursday.
The South Korean authorities made this determination after conducting a thorough investigation, which included analyzing IP addresses, asset flow patterns, and the use of North Korean-specific terminology. This conclusion was reached with the support of the U.S. Federal Bureau of Investigation (FBI), marking the first time that South Korea has directly tied North Korea to a cryptocurrency theft.
Detailed Investigation and Laundering Methods
Investigators traced the stolen ether, revealing that the hackers laundered approximately 57% of the funds by converting them to Bitcoin at discounted rates through three exchanges they allegedly set up. The remaining stolen funds were moved across 51 overseas platforms.
In collaboration with Swiss authorities, South Korea was able to recover 4.8 BTC, which had been traced back to a Swiss-based crypto exchange.
North Korea’s Cybercrime Network
The FBI has long been warning about North Korea’s state-backed cybercrime activities. The country has been linked to several high-profile crypto heists, including the $100 million attack on the Harmony Horizon Bridge and the $600 million Ronin Bridge breach. Earlier this year, the FBI issued a warning about North Korea’s growing focus on targeting employees in the Web3 industry to exploit vulnerabilities and steal digital assets.
In response to these ongoing threats, South Korea’s Foreign Ministry revealed that it is training officials from ASEAN countries to better combat North Korean cryptocurrency theft.
Both Seoul and Washington have repeatedly accused Pyongyang of employing government-trained hackers to steal digital assets, particularly Bitcoin and other cryptocurrencies, from global exchanges. These claims have been backed by prominent IT firms and blockchain analytics companies, which have pointed to organizations linked to North Korea, such as the Lazarus Group.
South Koreans Turn to Crypto Amid Pension System Distrust
In a separate development, a recent survey found that many young South Koreans are losing faith in the national pension system, with a growing number turning to cryptocurrencies and stocks as alternatives. The study revealed that more than 75% of individuals aged 20-39 “don’t trust” state-issued pensions. Over half of those who have made independent retirement plans are building their funds with crypto and stocks.
Interestingly, even election candidates in South Korea have shown exposure to cryptocurrencies, with around 7% of them reporting ownership of digital assets, according to a Yonhap report analyzing asset disclosures.
South Korea’s Plans for Cryptocurrency Taxation
In related news, South Korea’s ruling Democratic Party of Korea (DPK) announced plans to implement cryptocurrency taxation starting in January 2025. This move marks the end of several delays, as the 20% tax on crypto gains (22% with local taxes) was initially set to begin in January 2022 but was postponed twice due to opposition from investors and industry experts. Recent discussions have included proposals for further delays, with some suggesting the tax could be postponed until 2028.
As the crypto space continues to grow in South Korea, the country remains vigilant in combating cyber threats and addressing the increasing reliance on digital assets among its citizens.
