Bitcoin ETF security concerns mount after FBI warns of North Korean hackers

North Korean hackers are reportedly targeting the billions of dollars in BTC and ETH held by crypto ETF custodians.

The United States Federal Bureau of Investigation announced on Sept. 3 that North Korean scammers and hackers were targeting firms associated with cryptocurrency-related exchange-traded funds (ETFs).

Despite the billions of dollars flowing into these crypto ETFs, investors may be too quick to assume their assets are fully secure.

North Korean hacker groups such as Lazarus Group are no strangers to the cryptocurrency industry and are suspected of committing a number of hacks against prominent exchanges and blockchain protocols.

Officials fear they could target crypto-backed ETFs by going after their underlying assets.

Stock market ETFs must have a solid system that tracks and replicates the underlying asset price accordingly.

However, fund managers for a spot crypto ETF must provide custody — either themselves or through a third party — of the physical digital assets to match the total assets under management (AUM).

These honeypots are too big to ignore. According to data from Farside Investors, the total cumulative flows of spot Bitcoin

BTC

tickers down

$57,551

ETFs alone have surpassed $15 billion since July 2024.