Chainalysis Reveals Boom in North Korea-Affiliated Hacks in 2021

A new report from crypto analytics platform Chainalysis revealed that North Korean hackers (cybercriminals) have stolen Bitcoin and Ethereum worth about $400 million but had millions of these stolen funds unlaundered.

Chainalysis reported on January 13 that the funds stolen by these cybercriminals can be traced to attacks on a minimum of seven crypto exchanges. Also, the analytics provider opined that these attacks likely emanated from a single infamous cybercriminal entity called the Lazarus Group.

Chainalysis reported that the number of North Korean-affiliated hacks increased from a possible minimum of four in 2020 to seven in 2021. The analytics provider also revealed that the value of hacks increased by 40%, as Chainalysis labeled 2021 a “banner year” for the cybercriminals, considering how Bitcoin and Ethereum performed that year.

The hackers used various malicious methods, including code exploits, phishing, malware, advanced social engineering, and code exploits to steal funds from crypto exchanges with minor bugs or porosity in their systems.

That said, Bitcoin theft accounted for 20% in 2021, based on a dollar measurement value. However, Ethereum accounted for 58% of total loot in 2021, while other coins and ERC-20 tokens made up 22% of stolen funds.

Chainalysis Details Hackers’ Laundering Process

Explaining the laundering process, Chainalysis noted that the criminals first swapped ERC-20 tokens and other altcoins for Ether via a decentralized exchange (DEX). Then, the Ether gets transferred into a mixer, a software service that erases the trails on crypto transactions, essentially making the coins impossible to trace. Finally, the mixed coins are converted to Bitcoin, and the laundering is complete.

Stolen BTC is also mixed and moved into a new wallet. The cybercriminals then transfer the clean BTC to deposit addresses on crypto exchanges that allow crypto to fiat conversion and are based in Asia.

Chainalysis highlighted that the North Korean hackers appeared to have a likeness for mixers. The report added that over 65% of all stolen funds in 2021 got laundered but mixers.