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As we venture deeper into the digital age, we are faced with the emergence of new, intangible threats – with no industry more exposed than cryptocurrency against the rise of the state-sponsored crypto hack.
Among these is state-sponsored hacking – an alarming phenomenon given its geopolitical implications and potential to disrupt the global economy.
However, the money that these state-backed hackers amass, particularly through cryptocurrency, has largely remained a mystery.
This article aims to shed light on this enigma by tracing the trail of state-backed hacking in the crypto sphere and estimating how much these digital pirates are truly earning.
The Rise of State-Sponsored Crypto Hacking: An Overview
Reports indicate a record $3.8 billion worth of cryptocurrency was stolen last year, with North Korean-linked hackers contributing significantly to the figure.
The shift in focus to cryptocurrency is not random: blockchain-based currencies offer the promise of anonymity and are hard to trace, making them perfect for nefarious activities.
North Korean hackers, for instance, pilfered an estimated $1.7 billion in 2022. They were implicated in some of the most significant crypto hacks of the year, including the $600 million Ronin network breach and a $100 million attack on Harmony.
This suggests that cryptocurrency hacking contributes a significant portion to North Korea’s economy, given that the nation’s total exports in 2020 were valued at $142 million.
The hacks are not limited to North Korea, with other shady states also suspected of funding similar operations.
While it’s challenging to quantify the exact amount stolen due to the secretive nature of these operations, the scale is undoubtedly vast.
Unpacking the Hackers’ Methods: How Do They Do It?
Decentralized finance (DeFi) protocols were the primary targets of these hackers, accounting for over 80% of all cryptocurrency stolen last year.
DeFi protocols replace traditional financial institutions with software that lets users transact directly with each other via blockchain. These systems are vulnerable to hacks, as demonstrated by the numerous attacks on cross-chain bridge protocols, these bridge services hold substantial reserves of different coins, making them enticing targets for hackers.
Furthermore, some hackers have reportedly posed as workers from different nationalities to infiltrate these firms and funnel money back to their home countries.
This highlights the hackers’ cunning and adaptability, demonstrating the lengths they are willing to go to attain their objectives.
Counting the Spoils: How Much Are They Making?
Estimating how much these hackers make is challenging due to the lack of transparency and the highly technical nature of these thefts. However, we can still piece together some insights.
In 2022, the top ten crypto hacks accounted for a staggering $2.375 billion.
The largest of these was the $612 million Ronin bridge hack. The infamous Lazarus Group, suspected to be backed by the North Korean state, was implicated in this attack, underlining the role of state-backed actors in large-scale crypto thefts.
But it’s not just the scale of the hacks that’s worrying, it’s the regularity that is also concerning.
H1 2023 Web3 Security Statistics
??Total losses from hacks, phishing scams, and rug pulls in Web3 reached $655.61 million in the first half of 2023.
Among them,
108 attacks -> $471.43M
Phishing scams -> $108M
110 rug pulls -> $75.87M pic.twitter.com/8Q9kmDETfQ— Beosin Alert (@BeosinAlert) June 30, 2023
According to a report by Beosin, the first half of 2023 saw $656 million lost to hacks, scams, and rug pulls, with $471.43 million lost in 108 protocol attacks alone.
Crypto Hack Security: Can We Turn the Tide?
While the situation seems dire, all hope is not lost, law enforcement and national security agencies are stepping up efforts to combat digital criminals. These efforts, along with the crackdown on money laundering techniques, promise to make future hacks more challenging and less fruitful.
But one thing is certain: as we delve further into the digital era, we need to be prepared for the rise of new threats, such as state-sponsored hacking.
The more we understand these operations, the better we can protect ourselves and mitigate their impact, therefore, the onus lies on us to remain vigilant, continue exploring these murky waters, and safeguard our digital future.
