South Korea Identifies North Korea as Responsible for $41 Million Upbit Cyber Heist

South Korea has accused North Korea of being behind the 2019 hack of the cryptocurrency exchange Upbit, which led to the theft of 342,000 ETH, then valued at $41.5 million.

The misappropriated assets, now valued at over $1 billion, represent one of the largest cryptocurrency thefts associated with North Korea, as announced by the South Korean National Police Agency on Thursday.

“[We] arrived at this conclusion based on an extensive analysis of evidence collected during the investigation,” the police stated in a release.

South Korea Examines IP Addresses and Asset Movement Patterns

Authorities linked the incident to North Korea after conducting a thorough examination of IP addresses, patterns of virtual asset movement, and the use of terminology specific to North Korea.

This conclusion, corroborated by evidence obtained in collaboration with the U.S. Federal Bureau of Investigation (FBI), marks the first instance in which South Korea has directly associated North Korea with a cryptocurrency theft.

The hackers are said to have laundered approximately 57% of the stolen ether by converting it to bitcoin at a reduced rate through three exchanges they allegedly established.

The remaining assets were transferred across 51 international platforms.

N. KOREA’S $41.5M CRYPTO HEIST CONFIRMED
South Korea confirmed that North Korean hackers stole $41.5 million worth of cryptocurrency from Upbit in 2019.
The theft, led by Lazarus and Andariel hacking groups, was traced using IP addresses, language analysis, and FBI… pic.twitter.com/HqTts0w4zm

— Mario Nawfal (@MarioNawfal) November 21, 2024

In a joint effort with Swiss authorities, South Korea successfully recovered 4.8 BTC, tracing it back to a Swiss-based cryptocurrency exchange.

The FBI has consistently emphasized North Korea’s involvement in cybercrime, previously connecting state-sponsored hackers to significant cryptocurrency thefts, including the $100 million Harmony Horizon Bridge incident and the $600 million Ronin Bridge breach.

Earlier this year, the agency cautioned about North Korea’s increased targeting of Web3 industry personnel to exploit weaknesses and seize digital assets.

Last month, the South Korean Foreign Ministry announced that it is training its ASEAN counterparts to counter North Korean crypto “theft.”

Seoul and Washington have repeatedly accused Pyongyang of employing government-trained hackers to pilfer Bitcoin and other tokens from global cryptocurrency exchanges.

These allegations have been supported by major IT firms and blockchain analytics companies, which have identified Pyongyang-linked entities such as Lazarus.

South Koreans Embrace Cryptocurrency

A recent survey indicated that a majority of young South Koreans are losing confidence in the national pension system, with many expressing that they view cryptocurrencies and stocks as preferable alternatives.

The research revealed that over three-quarters of individuals aged 20-39 “don’t trust” state-issued pensions.

More than half of those who reported creating their own pension plans stated they were accumulating their retirement savings through stocks and cryptocurrencies.

Notably, even election candidates have exposure to cryptocurrencies, with around 7% of them owning digital assets, according to a report by Yonhap that examined their asset disclosures.

Recently, South Korea’s ruling Democratic Party of Korea (DPK) announced that it is proceeding with plans to implement cryptocurrency taxation starting in January 2025, concluding previous delays.

Initially scheduled for January 2022, the 20% tax on crypto gains (22% including local taxes) faced significant opposition from investors and industry professionals, leading to two postponements.

Recent discussions included proposals for additional delays, with one suggesting a start as late as 2028.

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