South Korea National Office of Investigation has recently confirmed that the notorious North Korean hacker groups Lazarus and Andariel orchestrated the 2019 Upbit cryptocurrency exchange hack.

This attack resulted in the theft of 342,000 Ether (ETH), worth approximately $50 million at the time.

Tracking the Hack

The theft, which took place on November 27, 2019, saw hackers drain funds from Upbit’s hot wallet. Since then, the value of Ether has skyrocketed, turning the stolen amount into a staggering $1 billion in today’s market. The investigative breakthrough was made possible through meticulous analysis of cryptocurrency flows, IP address tracking, linguistic patterns, and collaboration with the U.S. Federal Bureau of Investigation (FBI).

This announcement marks the first official confirmation of North Korean involvement in a cryptocurrency heist by a South Korean investigative body. Authorities, however, chose to withhold details about the hacking techniques to deter potential copycat attacks.

Laundering Stolen Funds Across Borders

Following the breach, the hackers are believed to have liquidated 57% of the stolen Ether through exchanges allegedly controlled by North Korea. The remaining funds were laundered across 51 international exchanges, further complicating recovery efforts.

While the stolen funds continued to fuel concerns about North Korea’s cyber-financing of its illicit programs, Upbit found itself under scrutiny for separate issues. On November 14, South Korea’s Financial Intelligence Unit (FIU) identified up to 600,000 potential Know Your Customer (KYC) violations during a review of the exchange’s business license renewal.

The alleged violations included accepting blurred identification cards, which hindered proper user identification. If proven, Upbit could face penalties of up to $71,500 per violation, alongside potential complications in renewing its operating license.  

The confirmation of North Korea’s involvement in the Upbit hack highlights the growing sophistication of state-backed cybercrime in the crypto space. For South Korea, it underscores the urgent need for stringent security measures and robust regulatory oversight.

This case also shines a spotlight on the vulnerabilities of global cryptocurrency exchanges, particularly those dealing with decentralized and borderless assets.

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