The intersection of cryptocurrencies and national security is a pressing concern that cannot be overlooked. It presents a significant threat with wide-ranging implications. At the heart of this concern lies North Korea, Russia and associated groups, which engage in ransomware attacks and various hacking endeavors. The proceeds from these illicit activities can fuel weapons programs and strengthen their economy.
Joan Heald, vice president of Intelligence Community and Defense Department software solutions for Chainalysis, explains that this is particularly noteworthy considering that North Korea’s total exports only reportedly totaled $142 million worth of goods in 2020, while their record $1.7 billion stolen from the cryptocurrency ecosystem in 2022 reveals that illicit gains comprise a sizable amount of their annual income.
Concrete steps are being taken to prevent further theft and illicit funds from reaching these nations. Public and private entities are working together to develop policies, authorities and capabilities to detect and ban these transactions. “The effectiveness of those efforts is highly dependent on the evolution of tools and their efficient integration into enforcement mechanisms,” says Colonel David Hamilton, U.S. Army, Ret., threat finance exploitation consultant.
“We’re also decreasing the potential return on investment for these illicit actors by successfully recovering stolen digital assets and blacklisting addresses tied to stolen and laundered cryptocurrencies to render those assets [unrecoverable],” he adds. “As is often the case, prevention is the best tool to starve adversaries. When prevention fails, we must have the tools and authorities to take swift and decisive action to prevent the funding of illicit activity.”
When combating cryptocurrency-based crime in Russia, prevention through system hardening and cyber safeguards is prioritized. “Blockchain analytics could play a big role here. Using a tool like Chainalysis Reactor would help analysts build that pattern of life scenario that’s so important. It also helps them uncover obfuscated funds from their origin to destination,” adds Heald. Advanced tracing allows investigators to glean insight and “follow the money” to determine where the ultimate destination of ransomware proceeds go.
Education, awareness and collaboration between law enforcement agencies and regulatory industries play a vital role in safeguarding the integrity of systems and digital assets. Swift implementation of software upgrades is equally essential. By coordinating efforts to dismantle illicit services and apprehend individuals involved, the collective response forces these actors to adapt and seek new methods.
Learn more here for further insights into the intersection of cryptocurrency and national security.
This video panel discussion was produced by Scoop News Group and underwritten by Chainalysis.