North Korea obtained at least 10,000 bitcoins last year. Priscilla Moriuchi, who has been in charge of cybersecurity in the Asia-Pacific region at the U.S. National Security Agency, believes the cryptocurrency has been acquired through mining or hacking in 2017.
The value of the stashed coins is estimated at USD 200 million, as of December last year, when the price of bitcoin was at its peak. If you’re trading Bitcoin, there’s a chance you might be funding Kim Jong-un’s regime in North Korea. So how’s that?
Priscilla Moriuchi has been sorting through North Korea’s internet browsing data for months trying to develop some warning tools for the missile tests, but instead, she found something else. Bitcoin mining!
“When I retrieved the data, I noticed there was an unusual amount of bitcoin activity that I had not seen before. I went back and was able to confirm as the weeks went on that the activity was still continuing; that it was mining.”
Moriuchi works at Recorded Future a threat intelligence firm backed by Google and the CIA. They have unique access to the browsing activities of North Korean leadership provided by their partners.
“The bitcoin mining activity that we saw involved more than one of the North Korea IP ranges, which means that it was likely that it was more than one person.”
But who would be able to mine Bitcoin in North Korea? After all, most North Koreans don’t even have internet access, and Bitcoin mining is a computationally intensive process. Miners need high-performance customized computers to pull it off. Moriuchi’s hypotheses lead us to North Korean leadership. But why would a rogue nation like North Korea care about Bitcoin?
“I have two hypotheses about who is behind the North Korea bitcoin mining operation. First is that the state sponsors mining activity as a way to generate funds for the regime. The second hypothesis is that it’s an individual user among this small silver of leaders and their families who have access to the internet.”
North Korea desperately needs new ways to make money under the UN sanction imposed in August 2017, when China has banned imports on North Korea’s iron coal and seafood. That’s about 35% of North Korea’s trading income.
But bitcoin is an open network that gives people options to send and receive money anonymously, so in short North Korea can mine Bitcoin to earn valuable income, legally and hardly leave a footprint.
But would be able North Korea to exchange their Bitcoin for FIAT? Probably, but not in the United States. In 2014 the US Treasury Department expressed concerns on digital currencies being used by nations looking to evade sanctions. A year before that, the Treasury had asked digital currency exchanges to register with FinCEN, the Financial Crimes Enforcement Network and report suspicious transactions.