Thu 12 Sep 2024 ▪ 5 min read ▪ by Mikaia A.
Inform
Cybersecurity
Bitcoin and its crypto peers are never safe, but this time, the alarm is serious. The FBI has sounded the alarm, reporting North Korean hackers targeting companies related to crypto funds. Between massive capital flows and security breaches, cybercriminals are never far away, and crypto ETF assets could be the next target.
Bitcoin and the threat of North Korean hackers
Through hacking, North Korea seems to be challenging the world. And the FBI is not mincing words. North Korean hacker groups, starting with the infamous Lazarus Group, seem to have set their sights on Bitcoin ETFs. With more than $15 billion injected into these funds since July 2024, the assets under management represent a real treasure trove for these cyber hackers.
Bitcoin and the threat of North Korean hackers
Through hacking, North Korea seems to be challenging the world. And the FBI is not mincing words. North Korean hacker groups, starting with the infamous Lazarus Group, seem to have set their sights on Bitcoin ETFs. With more than $15 billion injected into these funds since July 2024, the assets under management represent a real treasure trove for these cyber hackers.
The problem? A large portion of these funds are not insured against theft, which would make a nightmare a reality if a hack were successful.
Imagine for a moment: a successful attack on a Bitcoin and Ether ETF, and the entire crypto market is plunged into panic. As security expert Jameson Lopp explains: “If an ETF gets hacked, expect it to immediately drop to zero.”
Behind this threat lies a disturbing reality for investors, often blinded by the lure of profits without taking into account the risks. What if a flaw was discovered? A series of liquidations, and voila, the domino effect. Billions would evaporate, taking with it confidence in an already fragile market.
Crypto Hacking: ETF Flaws to Watch Out For
If crypto ETFs seem like a neat invention, they still need to be well secured. The problem is that the management of the funds' keys is not always flawless. As cybersecurity expert Steven Walbroehl explains, the fact that most funds are managed by a single entity represents a huge risk.
In the event of a security breach at that entity, the entire system could collapse. There is no clear regulation to set standards for the security of crypto ETFs, which leaves the door open to hackers.
Fidelity, the only fund manager to have opted for self-securitisation, stands out. For Jameson Lopp, it is the best strategy: “Each ETF should do the same to insure its own assets and avoid being dependent on an opaque third party.”
And what about the others? By delegating management to external, often opaque partners, managers take the risk of entrusting their assets to what we might call a “black box.” This is where hackers rub their hands, ready to seize any opportunity.
Custodian diversification could be a solution, but it is not without risks. Too many cooks are said to spoil the soup. More intermediaries also mean more complexity and additional risks related to transferring assets. Finding the perfect recipe to secure these mountains of crypto is difficult.
Faced with the threat of North Korean hackers, the United States, through the FBI, is always on a war footing. In 2022, they even revealed to the public the Lazarus Group's crypto hacking technique.
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Faced with the threat of North Korean hackers, the United States, through the FBI, is always on a war footing. In 2022, they even revealed to the public the Lazarus Group's crypto hacking technique.
Maximize your Cointribune experience with our Read to Earn program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
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