New reports are suggesting that the North Korean government is using the digital currency Bitcoin in order to bypass regulations.
Pyongyang is Mining Bitcoin
In the last couple of months, the tensions between North Korea and the United States have gone from tense to dramatically worse. On August 2017, the United Nations Security Council passed a new resolution that imposed even stricter sanctions on the North Korean government.
A very recent article by VOAnews reports that Pyongyang has started its very own Bitcoin mining operation, which peaked back in May 2017. According to the Virginia-based intelligence research firm, Recorded Future, Bitcoin mining could potentially become a major source of income for the North Korean government. Priscilla Moriuchi, a Recorded Future director commented the situation with following words:
The first [hypothesis] is that it could have been an activity conducted by the state, whether it be the military or the intelligence services, for the purposes of raising funds for the regime. The second hypothesis is that it was an individual user … but because of the bandwidth and energy that were required, it would have to be known or permitted by the state and the leadership. Over the past few years, we’ve seen increasingly tough sanctions levied upon North Korea by the United States, other international partners and by the United Nations. Those sanctions have increasingly cut off North Korea’s access to the traditional financial system and [its] ability to generate funds for state operations. We believe that bitcoin and cryptocurrency mining or activity involving cryptocurrency is a way for North Korea to generate funds and get around some of the sanctions.
Experts also believe that the North Korean government could have the capability to hack into South Korea Bitcoin exchanges. Bitcoinist recently reported that North Korean hackers might have been behind a wave of Spearphishing attacks that were targeting South Korean cryptocurrency exchanges.
Should the UN be Worried?
North Korea has been known for operating a lot of illegal operations like counterfeiting money, drug trading etc. in order to fund the government. Now experts believe that Bitcoin mining could become an alternative income source for North Korea.
Priscilla Moriuchi commented:
[Mining bitcoin or any other cryptocurrency] is not illegal. There’s nothing about [using cryptocurrency] that puts North Korea in a worse spot in terms of sanctions or legal violations. So that’s one. Two, you can buy many things. You can exchange cryptocurrency for actual currency, but you can also buy physical goods with cryptocurrency. So it’s another way for them to purchase things they might need without using the financial system.
The biggest benefit of such an operation is the fact that Bitcoin is an anonymous cryptocurrency. With Bitcoin, the North Korean government could bypass international sanctions and thus gain access to the international trading market without having to rely on banks.