North Korean hackers, particularly Lazarus Group, have mastered sophisticated cyber techniques to infiltrate crypto platforms and steal vast amounts of money. Their attacks involve social engineering, malware, smart contract exploits, and bridge hacks. Here’s how they do it:
1. Social Engineering & Spear Phishing
🔹 How it works: Hackers impersonate job recruiters, developers, or investors and trick employees of crypto firms into installing malware.
🔹 Example:
- In 2022, Lazarus Group targeted Axie Infinity by sending fake job offers to engineers. One developer downloaded a malicious PDF, giving hackers access to Ronin Network’s private keys, leading to a $620 million hack.
2. Exploiting Cross-Chain Bridges
🔹 How it works: Cross-chain bridges facilitate asset transfers between blockchains but often have security vulnerabilities. Hackers exploit poor smart contract security or compromised validators to drain funds.
🔹 Example:
- Harmony’s Horizon Bridge ($100M hack in 2022) – Hackers gained control of multi-signature wallets by compromising two out of five private keys.
- Nomad Bridge ($190M drained in 2022) – A flawed smart contract allowed anyone to withdraw funds without verification.
3. Private Key & Wallet Compromise
🔹 How it works: Hackers use malware, phishing emails, or fake apps to steal private keys of wallets used by crypto firms.
🔹 Example:
- Atomic Wallet Hack ($100M in 2023) – Lazarus used a supply chain attack to infect wallet software and extract private keys.
- Stake.com Hack ($41M in 2023) – Hackers compromised hot wallets by likely breaching admin credentials.
4. Exploiting DeFi Protocols & Smart Contracts
🔹 How it works: Many DeFi platforms have vulnerabilities in their code, allowing hackers to drain liquidity pools, manipulate oracles, or execute flash loan attacks.
🔹 Example:
- Beanstalk ($182M in 2022) – Hackers exploited a governance loophole to gain majority voting power and drain the protocol’s funds.
- bZx Protocol ($55M in 2021) – Attackers used a phishing attack to steal a developer’s wallet key, taking control of the protocol’s assets.
5. Mixing Stolen Crypto via Tornado Cash & Sinbad Mixer
🔹 How it works: To launder stolen funds, Lazarus uses crypto mixers like Tornado Cash or Sinbad.io (used after the Horizon hack) to obscure transaction trails before converting crypto to fiat.
🔹 Example:
- The FBI traced $40M of laundered funds from the Stake.com hack to Sinbad.io.
- Tornado Cash was sanctioned by the U.S. Treasury for aiding Lazarus in laundering over $455M from various attacks.
6. Supply Chain Attacks on Crypto Firms
🔹 How it works: Hackers infect third-party tools, software, or APIs used by crypto platforms to insert malware.
🔹 Example:
- 3CX Supply Chain Attack (2023) – Lazarus inserted malware into a widely-used VoIP software, targeting crypto firms using the software.
- Kaspersky discovered malware-infected macOS trading apps linked to Lazarus.
How They Cash Out Stolen Crypto
- Chain Hopping – Convert stolen funds into different cryptocurrencies across multiple blockchains to evade tracking.
- Crypto Mixers – Use Tornado Cash, Sinbad, or Blender.io (sanctioned by the U.S.).
- OTC (Over-the-Counter) Trades – Sell stolen funds privately via Chinese brokers.
- Fiat Conversion via Shell Companies – Funnel funds through fake IT firms in China and Russia, disguising them as legitimate business transactions.
Notable Crypto Hacks by North Korea (2017–2024)
| Hack | Amount Stolen | Method Used |
|---|---|---|
| Ronin Network (Axie Infinity) | $620M | Social engineering, private key theft |
| Harmony Horizon Bridge | $100M | Multi-sig wallet compromise |
| Atomic Wallet | $100M | Supply chain attack, private key theft |
| Stake.com | $41M | Hot wallet breach |
| Beanstalk | $182M | Governance attack |
How to Protect Against North Korean Crypto Hacks
✅ Use multi-signature wallets – Prevents a single point of failure.
✅ Avoid downloading unverified files – Hackers target employees with malware-infected PDFs and apps.
✅ Use hardware wallets for large funds – Keeps assets secure from online attacks.
✅ Monitor on-chain transactions – Detect suspicious fund movements early.
✅ Regulatory compliance – Avoid using sanctioned mixers like Tornado Cash to prevent association with illicit funds.
Final Thoughts
North Korea’s state-sponsored cyber warfare unit is among the most dangerous in the world. They fund their nuclear program through crypto hacks, making them a persistent threat. The best defense is robust cybersecurity, strong operational security, and smart contract auditing.