Chainalysis: Lazarus Is to Blame for Last Year's KuCoin Crypto Theft

One of the biggest cryptocurrency thefts in history occurred last year. It involved the digital exchange KuCoin, which ultimately lost more than $275 million in total assets. Now, a new report has emerged blaming Lazarus – a North Korea-based hacking group – for the attack.

Lazarus Is Behind a Massive Theft

Lazarus has been active for several years. The organization is believed to be centered in North Korea. It is also alleged that the group has stolen more than $1.75 billion in total digital assets since the days of its initial birth according to new data from blockchain analysis firm Chainalysis. For the most part, this money is likely to have gone towards building and revamping the country’s nuclear arsenal and stabilizing its economy.

The $275 million figure lost by KuCoin represents approximately half of all the digital money that was stolen in 2020. Based in Singapore, the exchange primarily dabbles in mainstream digital currencies such as bitcoin and Ethereum. Chainalysis also reveals in its report that between 2019 and 2020, North Korea and Lazarus may have stolen as much as $316 million in virtual assets.

The firm says it was able to pinpoint Lazarus in the KuCoin attack thanks to the way the stolen money was laundered and stored. The enterprise says that the hacking group always follows the same pattern of sending money to mixers before placing it in separate accounts, and this time was no exception.

The money was acquired by the mixers and was moved about in different accounts to make the tracking process harder for whoever may have been looking to find the money. Kim Grauer – a leading researcher with Chainalysis – comments in a recent interview that the funds are likely allowing North Korea to recover economically following a huge downturn thanks to the coronavirus pandemic.

Grauer says:

The size and the way that funds are sent to mixers is extremely specific. It’s like a fingerprint… COVID has particularly further continued to devastate the North Korean economy and so we think that… the country may be becoming increasingly dependent on hacking for just funding. Period. When you think about $1.75 billion, it’s a rather significant amount of money for that country considering its GDP.

Getting the Funds Back

At the time of writing, it looks like KuCoin has managed to recover much of the lost money. The firm worked with “exchange and project partners” to gain approximately $222 million of the funds back, while its work with law enforcement agencies led it to recovering an additional $17.45 million.

However, this still led a massive chunk – more than $35 million – being left uncovered, and the exchange’s insurance was forced to cover these losses. In the end, while much of the stolen $275 million was ultimately returned, North Korea and Lazarus still managed to walk away with a solid profit.

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