North Korea Amassed Cryptocurrency Through Hacking, Says UN Panel (nikkei.com)

North Korea has used cyberattacks and blockchain technology to circumvent economic sanctions and obtain foreign currency, according to a panel of experts reporting to the U.N. Security Council. From a report: Pyongyang has amassed around $670 million in foreign and virtual currency through cyberthefts, using blockchain technology to cover its tracks, the panel told the Security Council's North Korea sanctions committee in its annual report, Nikkei has learned. It is the first time the panel has given details on how North Korea obtains foreign currency through cyberattacks. In its report, the panel recommended that member states "enhance their ability to facilitate robust information exchange on the cyberattacks by the Democratic People's Republic of Korea with other governments and with their own financial institutions," to detect and prevent attempts by North Korea to evade sanctions. The full report obtained by Nikkei, which has been approved by Security Council members for publication next week, says North Korea waged cyberattacks on overseas financial institutions from 2015 to 2018.

Comments

"using blockchain technology to cover its tracks"

[OneOfMany07]

I don't think those words mean what you think they mean.

It works fine for money laundering

[rsilvergun]

there's sites that'll do it for you and take a percentage. You can trace the chain of events, but you won't be able to put names to it. Eventually you cash it out for hard cash somewhere and viola, clean money.

Re:It works fine for money laundering

[Mashiki]

Too difficult for most criminal enterprises still. Most use tangible assets like vehicles or real estate in order to launder money. Three hot spots in the world for it right now: Vancouver, Canada. Brisbane, Australia, and San Francisco, USA.

Re:It works fine for money laundering

[Anonymous Coward]

Bitcoin basically falls under Chinese laws as it is Chinese controlled. China has the power to shutdown, destroy or determine what is and isn't legal in bitcoin at any point in time.

Theft isn't good

[PPH]

But what do you expect them to resort to when they don't have their own Federal Reserve that can create money out of thin air?

Re: Theft isn't good

[Anonymous Coward]

How did this get to +3 Insightful? Pyongyang can print as much money as they want to. They even have equipment to print US dollars, which they frequently do.

Re:Theft isn't good

[Solandri]

The amount of money a government can create "out of thin air" is limited by the productivity of the country. That's why the U.S, Germany, UK, etc. have been able to go into heavy deficit spending without serious economic consequences - they're still keeping government spending to a relatively small percentage of total GDP. But once the government starts creating more money than the country's productivity, the economy responds by devaluing the currency (basically lowering the value of the currency to keep spending equal to or less than productivity). That's what's crippled Venezuela's Bolivar - the socialist government there keeps trying to hand out more value in services than their economy is producing, resulting in massive inflation.

North Korea is in a situation similar to Venezuela. They have very little domestic productivity (and the largest chunk of it is put into the military). The only realistic way they can make more money (aside from ditching their system of government, which is unlikely to happen), is to steal it.

Re:Theft isn't good

[SuricouRaven]

Creating money in that manner is a powerful economic tool, but one which can go horribly wrong if not used with caution. If simply issuing currency worked all the time then there would be no need for taxation - and you can be sure that would be a popular political position to take. The problem is inflation: The more the currency is circulating, and less each individual unit is worth. Too much entering circulation not only means the value falls steadily, but can spark a crisis of confidence: If everyone sees their money falling in value then they want to get rid of it, which means it becomes even less valuable, so people try even harder to get rid of it, so the value falls... eventually the cycle reaches the dreaded hyperinflation stage, and you start to see people using wheelbarrows full of currency to buy their groceries and wiping their ass on trillion-dollar bills that are now worth less than toilet paper.

Re:Theft isn't good

[_merlin]

The US has the advantage of being able to inflate their problems onto the rest of the world, because the US dollar is the de facto global reserve currency for trading oil and gold. Hong Kong banks must keep US dollar reserves to issue banknotes. Until relatively recently, the US dollar was the only currency that could be directly converted to/from Chinese currency.

This started after the second world war, when the US had the strongest economic position, and was the biggest consumer. People also trusted the US government not to default on the gold standard, although that trust ultimately proved to be unfounded. But by the time the US defaulted on the gold standard, the US dollar was well established as necessary for trading oil.

Other governments need to walk a far finer line than the US when issuing debt and printing money because their currencies aren't seen as having inherent value globally.

Re:Theft isn't good

[dk20]

Until relatively recently, the US dollar was the only currency that could be directly converted to/from Chinese currency.

Citation? I remember bringing Canadian Cash and Canadian Dollar cheques drawn on Canadiian banks to the Bank of China (actually in China) and buying RMB like 15 years ago.

Re:Theft isn't good

[PPH]

I wonder where they steal their money from?

Your children.

Re:Theft isn't good

[_merlin]

When you do that, Bank of China handles the details for you. They have CNY and USD reserves on hand, and when necessary they'll convert USD/CAD and USD/CNY to keep things in order. The first additional currency that they allowed to be converted directly to/from CNY was JPY about ten years ago. After that they added GBP and AUD. You kinda can convert HKD directly under certain circumstances, but you've got the whole weirdness with the Hong Kong banks being required to hold USD reserves to issue banknotes (HSBC, Standard Chartered, Bank of China, etc.) so USD is still involved.

Re:Theft isn't good

[SuricouRaven]

The hoarding is, strangely, the opposite of hoarding - thanks to a bit of financial trickery called fractional reserve. Actual 'money' is a tiny amount of the money in circulation: It's almost all transfer of debt, tracked in meticulous detail. You take out a loan, you owe the bank money - then you put it into your bank account, which records how much they owe you. They then use that money - or rather, the debt to you - to fund more loans, to people who put it into their own accounts... and so on. A bank owes and is owed vast amounts of money that dwarf the actual amount of currency they have to hand.

It also means there is a small chance that, if a bank goes out of business, everyone who has a savings account with that bank will see their life's savings vanish through no fault of their own. It's highly unlikely, but it has happened - and is the reason that governments will shovel giant mountains of taxpayer money into a failing bank to make sure it doesn't happen again.

Nevermind that!

[Anonymous Coward]

We'll just say it involved hacking! Because hacking! Hacks! Hackers! You're now fully informed of all the relevant information and detail available.

Welcome to the daily drivel, with msmash and the other "editors" on the new new new slashdot!

Re:"using blockchain technology to cover its track

[AHuxley]

Why would any gov touch blockchain technology knowing the NSA was all over it early on?
The "tracking down" using OAKSTAR and MONKEYROCKET.
https://theintercept.com/2018/... (March 21 2018)
Every movement is known to the USA making the gathering, keeping and later sale of anything blockchain a trap.

Easier than printing it?

[thunderclees]

There is evidence that both the PRC and DPRK were counterfeiting US currency.