The FBI released the below information:
Federal charges unsealed in
February against three computer programmers linked to the government of North
Korea illustrate the appeal of cryptocurrency markets and exchanges for theft
and fraud.
The
assumed anonymity, relative lack of transparency, and varying regulations in
the world of virtual currencies have made them the payment of choice on darknet
marketplaces and in ransomware attacks and other criminal schemes. But
according to an October 2020 report from the Attorney General’s Cyber Digital Task
Force, those same qualities make them “particularly attractive, adaptable, and
scalable as a target for theft.”
Media
reports found $4.5 billion of cryptocurrency was reported lost to theft or
fraud in 2019—more than double what was reported lost in 2018.
In
explaining the threat, Justin Vallese, a Los Angeles-based FBI special agent
who worked on the investigation into the North Korean hackers,
said, “Criminals are always looking for less risk and greater reward.” And
for now, the world of virtual currencies can offer that.
A
Sustained Campaign of Cyber Intrusions and Thefts
The
indictment unsealed on February 17 added to the charges previously brought
against one member of the group, Park Jin Hyok, for the 2014 cyber intrusion
into Sony Pictures, a cyber-heist from Bank of Bangladesh, and the release of a
damaging ransomware variant known as WannaCry 2.0.
The
newer charges allege Park and two colleagues attempted numerous destructive
cyber intrusions, which included an array of cyber-enabled bank heists. These
efforts were designed to steal billions of dollars to fund a North Korean
regime stifled by international sanctions.
Assistant
Attorney General John C. Demers of the Justice Department’s National Security
Division described their efforts this way: “North Korea’s operatives, using
keyboards rather than guns, stealing digital wallets of cryptocurrency instead
of sacks of cash, are the world’s leading bank robbers.”
The
North Korean hackers are alleged to have created several malicious
cryptocurrency applications that looked legitimate but contained malware that
provided the hackers access to the computers of victims who downloaded them.
Those targeted could be individual investors but were more likely to be
employees of virtual currency exchanges. The applications were supported by
professional-looking websites that added an air of legitimacy to the new tools.
Once the application was installed,
it could give the criminals access to the victim’s cryptocurrency wallets and
private keys—allowing them to transfer funds from the victim’s wallet to
cryptocurrency wallets controlled by the hackers.
These
tactics and others allowed the North Korean hackers to steal $75 million from a
Slovenian cryptocurrency company, $24.9 million from an Indonesian
cryptocurrency company, and $11.8 million from a financial services company in
New York between 2017 and 2020.
Losses
can affect customers who have accounts at victimized exchanges when the firms
have taken such a hit that there’s not enough to pay customers back on the
assets they believe they have in the exchange.
The
markets and exchanges for virtual currencies are attractive to criminals
because they provide relatively fewer complications than thefts from
traditional financial institutions.
For
example, the charges allege the hackers attempted to steal $951 million via
Society for Worldwide Interbank Financial Telecommunication (SWIFT) transfers from
the Bank of Bangladesh but only made off with a fraction of that amount—about
$80 million. While it was still an enormous loss, the safeguards that were in
place at the bank prevented further damage.
Another
difficulty of schemes targeting traditional banking institutions is the need to
rely on a larger network of criminals to help steal and then launder the money.
“Criminals
aren’t always reliable,” Vallese said. “So there is a great deal of risk
involved between the theft and the money reaching the hackers’ accounts. With
cryptocurrency, you cut out nearly all the middle-men.”
Vallese noted that as the
value of certain cryptocurrencies has soared, more people are looking to invest
in them. “It’s definitely somewhere people want to be,” he said. “But where
there is potential for earning, there is potential for risk and loss.”
While
no one can guarantee any investment will retain or gain value, where an
investor chooses to hold that investment should have strong protections in
place to guard against cyber intrusions and thefts.
“When
deciding where to put money, make an informed decision,” Vallese said. “Do your
due diligence. Understand if they are a well-established, trusted exchange.”
Some important questions to ask are: Where is the exchange located? What kind
of security practices are used? What kind of monitoring and regulations are in
place?
The
FBI is working with a wide array of government and law enforcement agencies in
the U.S. and abroad to identify and address new cyber threats. The private
sector is a key partner in helping gather and share information. And, of
course, being aware of cyber threats and taking proper cyber security
precautions is the responsibility of every individual.
Even if the investment is a novel one, apply the same rigor as you would with any other financial choice. And as with any online interaction, carefully weigh the possible risks before opening any email, clicking on a link, opening an attachment, or downloading an application.
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