Tech
North Korean Hackers Transfer Stolen Cryptocurrency to Asian Payment Company’s Wallet
An investigation has uncovered an unexpected link between a well-known Cambodian payments company and North Korean hackers.
According to blockchain data, Phnom Penh-based Huione Pay received more than $150,000 in cryptocurrency from a digital wallet linked to the notorious Lazarus hacker group.
Linked to North Korea, the Lazarus Group has been implicated in major cryptocurrency thefts. In 2023, they hacked three cryptocurrency companies, Atomic Wallet, CoinsPaid, and Alphapo, and stole approximately $160 million. The United States considers these thefts part of a broader pattern of cybercrime funding North Korea’s weapons programs.
Providing currency exchange and remittance services, Huione Pay received cryptocurrency funds between June 2023 and February 2024. As reported by NewsThe company says it is unaware of the source of the funds, blaming the complex nature of the wallet’s transactions. However, crypto security experts note that there are tools to identify and avoid high-risk wallets.
The incident exposes at least one way North Korean hackers could launder stolen money through Southeast Asia’s financial systems. The United Nations has previously said cryptocurrencies have provided North Korea with the “perfect tools” to avoid sanctions and purchase prohibited goods and services.
Huione Pay’s board of directors includes Hun To, a cousin of Cambodia’s Prime Minister Hun Manet. There is no evidence that Hun To or Cambodia’s ruling family knew about these transactions, but it highlights how widespread such illicit operations can be.
The country’s central bank, the National Bank of Cambodia (NBC), says companies like Huione are not allowed to transact in cryptocurrencies. The ban, which went into effect in 2018, is aimed at preventing investment losses, as well as risks related to money laundering and terrorist financing. NBC said it would investigate Huione’s conduct, but did not specify what action it would take.
Tracing the Cryptocurrency Trail
Analysis of funds stolen by hackers in 2023 conducted by blockchain analytics firms TRM Labs and Merkle Science. They found that hackers went to great lengths to obfuscate their money trail, converting stolen cryptocurrencies into other forms of cryptocurrencies and engaging in multiple wallet transfers.
The stolen funds were converted primarily into Tether (USDT), a stablecoin, on the Tron blockchain. Tron’s speed and low cost make it popular for transactions, but it has also attracted illicit actors. A Tron spokesperson condemned such abuse of blockchain technologies but did not specifically comment on the Atomic Wallet hack.
Southeast Asia: A Hotspot for Cyber Money Laundering
Analysts say the area has become a major hub for high-tech cybercrime and money laundering in Southeast Asia. It is also rife with unregulated cryptocurrency service providers and online casinos that can act as “underground banks.”
Jeremy Douglas, former regional director of the United Nations Office on Drugs and Crime in Southeast Asia, says criminal groups, including Lazarus, are agile and stay one step ahead of law enforcement. Their operations now depend on technology and infrastructure across Southeast Asia.
Although Cambodia was recently removed from the Financial Action Task Force’s (FATF) “grey list” of countries with inadequate anti-money laundering policies, challenges remain. In a 2021 report, the FATF highlighted “significant gaps” in Cambodia’s regulations for cryptocurrency companies, an assessment that still stands.
The National Bank of Cambodia says it is working on new regulations to identify and punish the use of cryptocurrencies for illegal activities, including fraud, money laundering and cybersecurity threats.
Global implications
This case highlights the still maturing regulation of cryptocurrencies by state and federal agencies. Hackers and money launderers are becoming more sophisticated every day, exploiting loopholes in global financial systems and benefiting from less oversight in some jurisdictions.
It also highlights the imperative of cooperation between countries and financial institutions to counter cyber-enabled financial crime. The growing importance of digital currencies as they move towards mainstream acceptance and center stage is a double-edged sword. This involves ensuring their legitimacy across financial systems and preventing their misuse by criminal enterprises.
As the investigation continues, this case reminds us of the intricate nexus of technology, finance, and international security in our increasingly interconnected world.
(Photo by Micha Brandli)
See also: Study Finds $1.4 Billion Stolen in Cryptocurrency Hacks in First Half of 2024
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