North Korea-Linked Crypto Assets Frozen by Binance and Huobi: Elliptic
Blockchain analytics firm Elliptic has reported that it has collaborated with leading cryptocurrency exchanges Binance and Huobi to freeze cryptocurrencies worth around $1.4 million linked to North Korea. These stolen funds were dormant until recently and originated from the June 2022 hack of Harmony’s Horizon Bridge. In this article, we explore this incident and its implications for the cryptocurrency industry.
Binance and Huobi Freeze North Korea-Linked Crypto Assets
Elliptic announced on Tuesday that it has worked with Binance and Huobi to freeze “Lazarus Group hack proceeds.” The two crypto exchanges froze accounts containing approximately $1.4 million in crypto assets originating from the June 2022 hack of Harmony’s Horizon Bridge.
In its statement, Elliptic highlighted that the Horizon cross-chain bridge was attacked, resulting in the loss of $99.6 million in crypto assets, which were then laundered through the now-sanctioned Tornado Cash. Ethereum mixer Tornado Cash was banned by the U.S. Department of the Treasury’s Office of Foreign Asset Control (OFAC) last August.
The hacker behind the Horizon Bridge hack sent over 98% of the stolen crypto assets, including ETH, USDT, WBTC, and BNB, into the Tornado Cash mixer. The stolen crypto assets were then immediately converted into 85,837 ETH using Uniswap, according to Elliptic’s investigation. The blockchain analytics firm traced the funds’ complete trail through the mixer and attributed the hack to the Lazarus Group, a North Korea-controlled cybercrime organization. The Federal Bureau of Investigation (FBI) later confirmed the Lazarus Group’s involvement in the hack.
Elliptic Detects Money Laundering and Freezes Stolen Funds Linked to North Korea
According to Elliptic, the stolen funds remained dormant until recently when its investigators began to see them funneled through complex chains of transactions to exchanges. Simone Maini, Elliptic’s CEO, commented that “money laundering was detected and stolen funds linked to North Korea were frozen, in real-time.”
“As an industry, we have the power and responsibility to prevent digital assets from becoming a haven for money launderers and sanctions evaders and ensure that they are a force for good,” Maini added.
Binance and Huobi’s collaboration with Elliptic to freeze North Korea-linked crypto assets is a significant development in the fight against money laundering and sanctions evasion. This incident highlights the importance of blockchain analytics firms in identifying and tracing illicit activities in the crypto industry. It also underscores the need for crypto exchanges to work closely with regulatory authorities and implement stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures to prevent the use of digital assets for illegal activities.