By Kim Jae-kyoung

South Korea should beef up its vigilance against North Korea's possible attack on Bitcoin exchanges, international experts on North Korea warned Wednesday.

They said that with Bitcoin continuing to rise, the cash-strapped regime is highly expected to step up its efforts to hack exchanges of digital currencies in a desperate bid to evade sanctions and eventually earn hard currency.

Tara O, an adjunct fellow at the Pacific Forum CSIS based in Washington, said North Korea's attempts to hack digital currencies, including Bitcoin, are happening on a big scale.

"North Korea continuously seeks ways to bring in hard currency, and one way is to steal or demand payment in Bitcoin or other cryptocurrency, which can later be changed into dollars or yen or renminbi," O told The Korea Times.

One good example, she said, is "Lazarus Group's WannaCry malware, a malicious ransomware," that targeted businesses and governments in 150 countries, with over 200,000 victims, in May 2017.

"Lazarus Group, also known as Hidden Cobra and Guardians of Peace, used WannaCry to exploit a flaw in Windows operating systems to lock files on computers and demand a ransom, payable in Bitcoin," she said.

This is the same group responsible for the hack against Sony Pictures in 2014, the numerous attacks against the South Korean government from 2009-2013, and the more recent bank heists involving the SWIFT payment system against the central bank accounts of Bangladesh, Taiwan, Vietnam and Ecuador.

In its outlook report released a week ago, the Korea Internet & Security Agency also forecast that in 2018 South Korea will see more cyberattacks from North Korea targeting exchanges of decentralized virtual currencies.

Seoul considers cryptocurrency tax 2017-12-13 16:55  |  Economy
In a report in September, Security firm FireEye said hackers linked to North Korea have stolen bitcoins from at least three South Korean cryptocurrency exchanges since May 2017.

"Now, we may be witnessing a second wave of this campaign: state-sponsored actors seeking to steal bitcoins and other virtual currencies as a means of evading sanctions and obtaining hard currencies to fund the regime," the report said.

Cyberattacks targeting digital coins are increasing as Bitcoin has been soaring this year. The leading digital currency was hovering around $20,000 Wednesday, a meteoric rise from around $1,000 at the beginning of this year.

The anonymous nature of the transactions also is attractive to North Korean hackers. Bitcoin operates as a payment system with no central bank and are exchanged using encryption that allows currency movement without state intervention.

Against this backdrop, experts said South Korea should tighten its vigilance over Pyongyang's possible hacking attacks aimed at earning hard currency to support its missile developments and keep the regime afloat.

"Good old-fashioned vigilance, followed by sound cybersecurity practices, is a first step," O said.

"Affected entities and the governments need to quickly get the word out, including mitigating steps for the public to take."

She stressed that it is important to create a culture that doesn't punish employees for reporting being victims of phishing or hacking, but which does punish for withholding evidence and information once an attack becomes known.

At the same time, the experts called for President Moon Jae-in and his administration to take a more cautious approach to offering financial help for inter-Korea economic cooperation because it is being used to support North Korea in growing this cyber capability.

"In light of continuous and increased cyberattacks and nuclear and missile tests, supporting North Korea's development of such technical capabilities is irresponsible and just plain wrong," O said.

"North Korea takes the best students in math and science from elementary school and trains them through college to become cyber warriors."