Paradigm: "North Korea's Cryptocurrency Hacking Techniques Are Becoming More Sophisticated… Attack on Bybit Is Just the Beginning"

# Paradigm Research Analyst Warns of Escalating North Korean Cryptocurrency Hacking Threats A recent report by Paradigm Research partner Sam, published on April 1, highlights a significant evolution in North Korea's cryptocurrency hacking operations. Reflecting on the hacking incident involving Bybit in February, Sam meticulously analyzed North Korea's cyberattack strategies, organizational structure, and broader implications, while suggesting multi-faceted countermeasures. # Bybit Incident Unveils Sophisticated Cyberattack Strategy The hacking incident began when approximately $1 billion worth of tokens were transferred from Bybit's cold wallet to a new address. Soon after, $200 million worth of LST liquidations were reported. The SEAL 911 community promptly issued alerts to crypto exchanges. Investigations revealed that Bybit’s multi-signature wallet infrastructure had been replaced with an unverified new version—confirming the event as a deliberate hack rather than mere maintenance oversight. Further revelations painted a more troubling picture. North Korean hackers had infiltrated the infrastructure of the multi-signature wallet service Safe{Wallet}, deploying malicious code specifically targeting Bybit. This operation underscores an unprecedented level of tactical precision and direct infiltration by North Korean cyber units. # The Structure Behind North Korea's Cyber Offensives Sam emphasized that North Korea's cyber warfare operates under a highly structured military system. The two core entities leading these efforts are the Reconnaissance General Bureau (RGB) and the Munitions Industry Department (MID). The RGB commands key hacking entities, including the infamous Lazarus Group, which has been instrumental in cryptocurrency heists. Meanwhile, the MID handles nuclear weapons development and IT personnel exports. North Korea’s Lazarus Group has gained notoriety since its 2014 Sony Pictures hack. The group attempted to steal nearly $1 billion from Bangladesh's central bank in 2016 and unleashed the WannaCry ransomware in 2017, causing billions of dollars in damage. Over time, their focus shifted to cryptocurrencies as a financial lifeline for the regime. Lazarus operates through specialized subgroups, each with distinct objectives. APT38 targets financial institutions, AppleJeus aims for supply chain attacks through malicious software integration, and TraderTraitor employs sophisticated phishing schemes to compromise cold wallets. High-profile breaches, such as Radiant Capital and WazirX, exemplify their operational prowess. # Evolving Cyber Tactics: Infiltration Beyond Hacking Apart from direct attacks, North Korea is intensifying efforts to infiltrate global enterprises under the guise of legitimate IT professionals—a strategy encompassing methods like "Wagemole" and "Contagious Interview." Wagemole involves operatives using fake identities to secure employment within foreign companies, leveraging internal access over extended periods to manipulate smart contracts, as seen in the Munchables hack. Conversely, the Contagious Interview tactic infects external developers' devices through job applications embedded with backdoor malware. # “Basic Security Measures Are No Longer Enough” Sam noted that while North Korean hackers have yet to exploit unknown vulnerabilities in cryptocurrency security, their methods have become alarmingly sophisticated. He stressed that standard security measures alone are insufficient. For instance, TraderTraitor’s tactics bypass conventional safeguards, directly targeting cold wallets. Sam recommends robust multi-signature structures and enhanced verification protocols at the organizational level as effective deterrents. The analyst added, “The FBI is actively operating a dedicated department to tackle North Korea’s cyber activities and notifying victimized companies. Industry stakeholders must establish networks with communities like SEAL 911 and security teams to bolster defenses.” As North Korea continues to refine its cyber warfare techniques, the report underscores the urgency for the cryptocurrency industry to adopt comprehensive security measures and international collaboration to counter future threats.