South Korea’s New Bill to Freeze North Korean Crypto Assets

South Korea is intensifying its crackdown on North Korea’s use of cryptocurrencies to fund its illicit weapons programs. On Aug. 29, President Yoon Suk Yeol announced plans for a new bill targeting North Korean virtual assets. 

The initiative follows 10 months of rigorous deliberations to strengthen South Korea’s existing sanctions against its northern neighbor.

Bill Proposes to “Track and Neutralize” Cryptocurrencies

Last year, an initial draft was returned by the president, who insisted it includes “practical measures to bolster national security.” Furthermore, the revised bill now incorporates specific strategies to “track and neutralize” cryptocurrencies that North Korea has stolen through cyberattacks.

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Yoon said he would underscore “the need to actively deter North Korea from stealing cryptocurrency, dispatching workers overseas, facilitating maritime transshipments and other illegal activities. These are the main funding sources for its nuclear and missile development.”

These elements make the current draft more robust than its predecessor, which was proposed by the National Intelligence Service (NIS).

North Korea Believed to Have Stolen $1.28 Billion Last Year

Pyongyang’s growing success in cyber theft forms the backdrop of this legislative move. South Korean intelligence estimates reveal that North Korea pilfered $1.28 billion worth of Bitcoin and Ethereum in 2022 alone. 

Yoon Han-hong of the People Power Party, highlighted that approximately $52.46 million from North Korean crypto hacking groups likely flowed through South Korean cryptocurrency exchanges. Adding further urgency is the sheer volume of North Korea’s cyber-criminal activities, linked to its missile program.

North Korean hackers have amassed over $3 billion over the past five years, claims Chainalysis. Subsequently, Anne Neuberger, the U.S. deputy national security adviser, revealed that half of North Korea’s missile program finds its funding through cyberattacks and crypto theft.

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These revelations echo concerns raised by experts reporting to the United Nations Security Council. They accused North Korea of channeling funds from cybercrimes into its nuclear and missile endeavors.

“As North Korea opens its border, recently, its workers in China and Russia are sending the money they earned back to the regime…

Also, in many cases, North Korean hackers are using Chinese banks for exchanging cryptocurrency they stole, so there is room for cooperation with China and Russia in terms of the North Korea issue,” Yoon concluded.

South Korea’s legislative focus extends beyond this single bill. The Yoon administration plans to establish a national cyber security committee directly under the president’s jurisdiction. This committee aims to bolster South Korea’s defenses against foreign hacking attempts.