Stablecoin Issuers Target North Korean Hackers

TL;DR

• Stablecoin Issuers Act Against Lazarus Group: Tether, Circle, Paxos, and Techteryx have frozen wallets linked to North Korea’s Lazarus Group, seizing nearly $7 million in stablecoins believed to be involved in laundering stolen funds.
• Criticism of Circle’s Delayed Response: Circle faced backlash for taking four months longer than other issuers to freeze the wallets, sparking frustration within the crypto community.
• Calls for Stronger Regulations: The incident has intensified debates on the effectiveness of anti-money laundering measures in the crypto space, with increased calls for proactive actions from stablecoin issuers.
  

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Tether, Circle, Paxos, and Techteryx—have identified and frozen wallets associated with the notorious North Korean hacking group, Lazarus. These wallets, containing millions in cryptocurrencies, are believed to be involved in laundering funds from various cyber thefts.

Update: As of today all four stablecoin issuers (Paxos, Tether, Techteryx, Circle) have now blacklisted the two addresses below with $4.96M from Lazarus Group.

0x36f2D3871edd59d5C06DB8F0b12bE928d5922A70
0x12ED7f6ed0491678764c2b222A58452926E44DB6

Another $1.65M is frozen at… pic.twitter.com/dZSOltDRy4

— ZachXBT (@zachxbt) September 14, 2024

The Scale of the Issue

According to blockchain analyst ZachXBT, the blacklisted wallets hold approximately $4.96 million in stablecoins, including USDT, USDC, BUSD, and TUSD. Additionally, another $1.65 million in assets linked to these wallets have been frozen by several cryptocurrency exchanges, bringing the total seized funds to $6.98 million.

This action follows reports that the Lazarus Group hacked the Indonesian cryptocurrency exchange, Indodax, stealing $22 million.

Delayed Response from Circle

While Tether, Paxos, and Techteryx acted swiftly to blacklist the wallets, Circle, the issuer of USDC, has faced criticism for its delayed response. ZachXBT noted that Circle took four months longer than other issuers to freeze the wallets associated with the Lazarus Group.

This delay has sparked frustration within the crypto community, with many arguing that earlier action could have halted the group’s activities on the platform.

Calls for Enhanced Regulatory Measures

The incident has reignited the debate over the efficiency of anti-money laundering (AML) measures in the crypto space. The responsibility of stablecoin issuers in combating illicit activities is under scrutiny, and there is a growing demand for enhanced regulatory measures.

The increasing activity of state-sponsored hackers like the Lazarus Group is a significant concern, prompting calls for issuers to act more proactively in identifying and banning malicious accounts.

The Broader Impact

The recent $22 million hack forced Indodax to suspend operations temporarily, highlighting the Lazarus Group’s capability and reach. Despite the freezing of $6.98 million in stablecoins, experts believe this is only a fraction of the total funds generated through the group’s criminal activities.

The blockchain community and regulators are actively seeking ways to prevent malicious agents from exploiting the decentralized nature of cryptocurrencies for illicit purposes.