WASHINGTON —North Korea’s cash-strapped regime has long sought workarounds to the
increasingly harsh international sanctions aimed at tightening the
financial noose around its nuclear and missile programs.
Now, according to Recorded Future,
an intelligence research firm backed by Google Venture, Pyongyang is
making a foray into cyberspace, launching a bitcoin “mining” operation,
which saw a dramatic spike in its activity in mid-May.
Although the bitcoin activity amounts to only a token amount of funds
at this point, there is significant potential for it to become a major
source of income for the regime, the company said.
Is North Korea’s pursuit of bitcoin, the best-known cryptocurrency
used for purchasing goods and services online, something the United
States as well as the international community should worry about?
WATCH: What is bitcoin?
VOA Korean
spoke with Priscilla Moriuchi, a Recorded Future director. Formerly
with the National Security Agency (NSA) as threat intelligence manager
and senior expert on East Asia and Pacific regional and cyber issues,
she discussed in detail her findings on North Korea’s cyberactivities.
Her answers have been edited for clarity and length.
Could you describe how Recorded Future first detected the North Korean activity in bitcoin?
Priscilla Moriuchi: The bitcoin mining [from North
Korea] started on May 17 and continued through the end of our data set,
which was July 3. This was a critical moment in terms of bitcoin [mining
activities] because before then, I haven’t seen any activity that we
had insight into indicating that [the North Koreans] were interested in
bitcoin.
Is there any substantive evidence for the North Korean bitcoin mining operation?
Moriuchi: [Mining] bitcoin is very computationally
intensive. It requires a lot of energy and high capacity computers. It
also requires a lot of internet bandwidth because it constantly
communicates with other bitcoin nodes (a peer-to-peer network consisting
of computers, which allows for transactions to be broadcast to other
users worldwide) to validate the blockchain (the digital ledger
technology that records all virtual money transactions) that they are
putting together. So mining activity is pretty distinct in terms of
volume, and the [internet] ports and protocols (IP address) that are
used are also pretty distinct. It can give you a decent signature.
Who is running the North Korean bitcoin mining operations, and why do you think the country has finally begun mining bitcoin?
Moriuchi: 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.
Do you think North Korea has come to a conclusion that using
cryptocurrency to generate funds for the regime is safer than other
illicit ways — for instance, smuggling drugs or counterfeiting money?
Moriuchi: [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.
There were reports that North Korea might have launched
cyberattacks against South Korean virtual currency exchanges. Do the
North Koreans have such a capacity?
Moriuchi: Yes, definitely. When it comes to North
Korean hacking activities, we broadly underestimate their capabilities
because many people believe [it is] such an isolated country where most
people don’t have access to the internet and ask how they can possibly
have indigenous experts, how they can possibly train people well enough
to be able to conduct some of these very sophisticated hacks.
But what we have come to know over time is that they are
sophisticated actors. They do have in-depth understanding of internet
networks and communications.
Do you believe North Korea meddled in the Sony hack in 2014?
Moriuchi: Yes, both the federal government like the
FBI (Federal Bureau of Investigation) and NSA have both come out and
said that North Korea was behind the Sony attack. I think most people
who follow North Korea agree with the government assessments.
It seems that reasons differ for North Korea’s cyberattacks
against South Korean virtual currency exchanges and for the Sony attack.
Why is that so?
Moriuchi: North Korean cyberactivities really
started about 2008 and 2009. [They were] mainly toward South Korean
government, corporations and media, as well as some U.S. government
entities, and they were intended to [cause] chaos and to disrupt South
Korea and undermine systems there. After the Sony attack, [there seemed
to be a] transition in most of the North Korean attacks that we in the
private sector have been able to follow toward financial services,
toward generating money and raising funds. I think we are in this new
period in terms of North Korean cyberactivity.
How much profit does North Korea make from mining bitcoin?
Moriuchi: At current rates, let’s say [North Korea]
earned about $100,000. So in terms of the amount of money that North
Korea may need for their missile program, $100,000 is probably not very
much. If you put that next to what experts estimate North Korea pulls in
just through its other kinds of criminal operations, such as the drug
trade, drug smuggling and counterfeiting of U.S. dollar bills, around
$500 million to $1 billion a year, $100,000 is a drop in the bucket.
Given the token amount of money North Korea makes through the
bitcoin mining activity, is it far-fetched to say the North is tapping
this digital currency exchange in order to evade sanctions and earn
income for the regime?
Moriuchi: Cryptocurrency, specifically bitcoin
mining, is one other method for them to circumvent sanctions and to
generate funds. It’s not the primary means of earning funds for the
regime right now, but it’s certainly something that they could expand
and that would be much more difficult for the international community to
be able to track and limit.
Why is it so hard to track the bitcoin activity?
Moriuchi: Bitcoin was designed to be anonymous, and
it doesn’t keep track of identifiers, such as IPs and usernames, while
mining, buying or spending bitcoin.
Additionally in the WannaCry attack,
in early August three bitcoin wallets associated with WannaCry were
emptied. What we saw were many steps taken by presumably the North
Koreans to further obfuscate where the funding was going. So first off,
they went through a bitcoin mixer, which is a service that essentially
throws all the bitcoin into one pot and then out comes the amount you
threw in but it’s not the same bitcoin that you put in. So it anonymizes
your identity. After going through that, they then convert it to
another cryptocurrency. So they went to great lengths to avoid even the
slim chance that they could be attributed through their bitcoin
transactions.
What do you think about the claim that the U.S. could take
out North Korea’s missiles before launch through jamming or other cyber
methods?
Moriuchi: There are two internets [in North Korea].
One, the global internet, and then the domestic intranet, the one that
regular North Koreans, though a small number, actually have access. And
then you have various other networks within the country — the
government’s and the military’s. The connections between the global
internet and anything inside North Korea are very few, based on the
research that I did. So [even] if it was possible for the United States
or whoever to attack a North Korean missile site or a launch using a
cyberattack, it would be very difficult.
How did you become interested in analyzing North Korean internet activities?
Moriuchi: We have this very unique set of data ...
and we felt like we can give much more context to the whole debate about
North Korea, especially about their cyberactivity. We did a big
analysis over the past few months, and we came away with a number of
conclusions based on North Korean leadership internet activity. The
biggest one for us was that, based on the activity that we saw, the
North Korean ruling elite and their leadership are much more active and
engaged in the world, popular culture, international news, and with
contemporary services, than most outsiders would have believed. They go
to Facebook, they go to Instagram every day, they stream video and a lot
of other things that many of us do. The 0.1 percent of [the North
Korean population] who has access to the world internet does those same
things.
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