South Korea pins 2017 crypto theft on North’s hackers

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Despite being set back by heavy regulation and privacy fines from its government, South Korean exchanges continue to operate and accommodate the increasing number of cryptocurrency users in the country. In Reuters report, South Korean intelligence officials accused North Korean hackers of infiltrating its exchanges and stealing cryptocurrency worth billions of won in 2017.

Kim Byung-kee, member of South Korea’s parliamentary intelligence committee, was quoted saying, “North Korea sent emails that could hack into cryptocurrency exchanges and their customers’ private information and stole (cryptocurrency) worth billions of won.” The government official did not disclose which South Korean exchanges were hacked.

With the rise of digital currency initiatives around the world, North Korea has been reported to have been covertly developing and mining a rival cryptocurrency in a bid to bolster its economy with the technology amid heavy international sanctions. According to the South Korean government’s intelligence agency, North Korea has continued to engage in related cybercrime attacks, with mounting evidence pointing to a specific unit called “Lazarus.”

North Korea’s offensives in cyberspace is escalating, according to cybersecurity experts. Information security firm Recorded Future said North Korea has engaged in hacking offensives in late 2017 right before the North-South dialogue began.

The backdoor malware employed in the exchange attacks were used against Sony Pictures Entertainment (2014) and the first WannaCry ransomware victims in February 2017. The hacking unit responsible for these methods has been identified as the “Lazarus” group, after affinities in code execution and malware infrastructure were noted to be indicative of a certain manner of intrusion.

The group has also been identified by security firm Symantec as the unit responsible for other financially-related cybercrimes, linking it to an attack to a bank in the Philippines in 2016, a theft of at least $81 million from the Bangladesh central bank, as well as an attempt to steal over a million U.S. dollars from Vietnam’s Tien Phong Bank in 2015.

Kim said the Lazarus group primarily used phishing campaigns to propagate its malware, socially engineering its targets and luring them into its propaganda. The campaigns specifically targeted South Korean college students interested in foreign affairs, or other South Korean citizens researching about North Korea’s history and politics.

In an analysis by infosec research firm AlienVault, an app compiled on the Christmas Eve of 2017 was found to be an installer for cryptocurrency mining software. The application mined Monero and sent all of its profits to Kim Il Sung University in Pyongyang, North Korea. AlienVault notes that the file is likely based on software called xmrig, adding that the app’s internal password indicated as “KJU” might be a possible reference to Kim Jong-un, North Korea’s leader since 2011.

In a tweet by Simon Choi, director of South Korean security solutions company Hauri, a zero-day vulnerability based on Adobe’s Flash Player was found to be hidden in the infected files. The vulnerability is present in Adobe Flash versions 28.0.0.137 and earlier. The flaw allows attackers to perform remote code execution on most operating systems. Here’s a hash of the incident response  for full reference.

With these threats posing risks for South Korean cryptocurrency investors and exchanges, Kim said the government was “doing its best” to protect the interests of its people. As security flaws are continually discovered by researchers and security analysts, threats like North Korea’s Lazarus hacking unit will continue to exploit and steal from different cryptocurrency exchanges. For users of leading cryptocurrencies like Bitcoin Cash, it’s best to adhere to best practices in crypto security such as making use of hardware wallets that support Bitcoin Cash, keeping up-to-date with standard address formats, and actively monitoring where funds originate from and where they go.