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US government says $650 million Axie Infinity cryptocurrency heist pulled by North Korea
The U.S. Treasury Department has added a North Korean hacking group calling itself the Lazarus Group to its international sanctions list, saying the group was responsible for Axie Infinity’s massive cryptocurrency theft that stole more than $600 million in March.
Axie Infinity uses a “sidechain” called Ronin that enables users to access the Ethereum blockchain without incurring many standard NFT transaction fees. Essentially, the Ronin and Ethereum blockchains run in parallel, connected by a digital “bridge” that allows cryptocurrencies to move between them. Unfortunately, a bug in the bridge also allowed hackers to steal 173,600 ETH and $25.5 million in USDC, which was converted to over $600 million at the time of the theft.
Ministry of Finance’sList of Specially Designated NationalsThe update did not explicitly mention the crime, but did list the Lazarus Group’s “digital currency address” Ether Scan He is currently identified as a “Ronin Bridge developer” and has “reportedly participated in the hacking attack on Ronin Bridge”.
The U.S. Treasury Department confirmed the link in a statement sent to PC Gamer, saying the list has been updated to include virtual wallets associated with the Axie Infinity heist. The wallet itself was discovered by the FBI during an investigation into posts by North Korea and state-backed actors such as the Lazarus Group.
“The FBI continues to combat malicious cyber activity, including the threat posed by the Democratic People’s Republic of Korea to the United States and our private sector partners,” an FBI representative told PC Gamer.
“Through our investigation, we were able to identify North Korea-linked cyber actors Lazarus Group and APT38 responsible for the $620 million ether theft reported on March 29. The FBI, working with the Treasury Department and other U.S. government partners, will Continue to expose and combat North Korea’s use of illicit activities – including cybercrime and cryptocurrency theft – to generate revenue for the regime.”
Sky Mavis, who runs Axie Infinity, also noted the FBI’s involvement in the Ronin Blog“Today, the FBI blamed the North Korea-based Lazarus Group for the Ronin Validator security breach,” it wrote. “The U.S. government, especially the Treasury Department, has approved addresses to receive stolen funds.”
This isn’t the first time we’ve heard of Lazarus Group. North Korea has already stolen at least $400 million in stolen digital assets in 2021, most of which was taken by Lazarus Group, Chainalysis said in January. Assuming that’s accurate, the Axie Infinity heist represents a serious escalation, overtaking the entire prior year’s earnings in one job.
Thread: OFAC’s update to the Lazarus Group SDN designation confirms that the North Korean cybercrime group was behind the March hack of the Ronin Bridge in which more than $600 million worth of ETH and USDC were stolen.April 14, 2022
ovalAnother crypto security firm estimates that North Korea has laundered 18% of the stolen funds; this balance, combined with the $170 million in stolen cryptocurrency North Korea reportedly held in January, means the country now has more than $500 million of unwashed cryptocurrencies.
As for why North Korea is carrying out the crypto heist, the U.S. Treasury Department said the country is trying to evade U.S. and U.N. sanctions to find funding for its weapons programs, which is why these agencies are so aggressively pursuing their sanctions programs. The effort is not without meaning: the United States recently jailed a former employee of the Ethereum Foundation for more than five years and charged him $100,000 for his 2019 trip to North Korea to speak out about “using cryptocurrency to evade sanctions” and money laundering.”
As for Axie Infinity, the developers said in their last update that they are still adding additional security measures to Ronin Bridge and hope to redeploy it by the end of April.But Axie could face bigger problems: reports game radar, digital “landlords” in the game have a hard time finding players willing to fill their quotas and help them make profits from NFT creatures.Pegasus acknowledged the problem In February, it removed daily quests to reduce the amount of SLP rewards flowing into the game, saying, “The Axie economy now requires drastic and decisive action or we risk a complete and permanent economic collapse.”