Speaker 1: This is Bloomberg Crypto, a daily Bloomberg I HUD podcast,
Speaker 1: and I'm Stacy Marie Ishmael, Managing editor of Crypto for
Speaker 1: Bloomberg News. It's Thursday, February twenty third. Want to hear
Speaker 1: a big number? How about three point eight billion with
Speaker 1: a b yep, that's the amount of crypto that hacker
Speaker 1: has managed to steal last year and it's a new
Speaker 1: record the company behind that number. Cha analysis also found
Speaker 1: that one specific hacking group was responsible for a huge
Speaker 1: chunk of that stolen crypto. If you guessed that the
Speaker 1: hacking group was Lazarus and you know that they're connected
Speaker 1: to North Korea, congratulations, you're probably a regular listener of
Speaker 1: this podcast. Lazarus allegedly stole one point seven billion dollars
Speaker 1: in twenty twenty two, with compares with less than half
Speaker 1: a billion dollars the year before. This further solidifies the
Speaker 1: notion that North Korean hackers are seeing the cryptocurrency sector
Speaker 1: as a way to raise funds and revenue in the
Speaker 1: face of international sanctions. Now, what does all of this
Speaker 1: mean for the crypto markets and what does it mean
Speaker 1: for you? If you hold crypto? Can anything to be
Speaker 1: done to prevent these kinds of hacks from happening. Joining
Speaker 1: me now is Bloomberg REPORTO Jeff Stone with more. Jeff,
Speaker 1: welcome back to the podcast. Thank you for having me.
Speaker 1: We are once again I'm going to talk about hackers.
Speaker 1: I love it. That's what I'm here for. Happy to
Speaker 1: do it. I continue to be fascinated by the fact
Speaker 1: that the North Koreans in particular seem to have emerged
Speaker 1: as the most profitable hackers in the entire old. Is
Speaker 1: that a fair assessment, I think so. It's a difficult
Speaker 1: thing to quantify candidly, but in very broad terms. If
Speaker 1: you think about the big nation state hacking groups, North
Speaker 1: Korea is singularly focused on generating revenue for Pyongyang. We
Speaker 1: know that they're under intense international sanctions, so raising money
Speaker 1: via hacking is a key part of their existence. Really,
Speaker 1: whereas like a Chinese hacking group might be more focused
Speaker 1: on stealing intellectual property, for instance. We know that Russia
Speaker 1: has been involved in all kinds of political stuff as
Speaker 1: well as just different kinds of mayhem, but that's really
Speaker 1: North Korea and hacker's singular focus. You know, you recently
Speaker 1: published a story about the fact that crypto hacks in general, right,
Speaker 1: so anything that you could mention, and this is based
Speaker 1: on a report by ch Analysis, had reached nearly four
Speaker 1: billion dollars in twenty twenty two, which was an increase
Speaker 1: from the year before when it was about three point
Speaker 1: three billion dollars. But the thing again that blew me
Speaker 1: away was how much of that was directly attributable to
Speaker 1: this one particular North Korean group. Me too, I mean,
Speaker 1: that was the biggest surprise, you know. I think everyone,
Speaker 1: probably all your listeners spent a lot of last year
Speaker 1: reading about different hacks and major hundreds of millions of
Speaker 1: dollars worth of theft in cryptocurrency. It's pretty staggering to
Speaker 1: think about almost half of that, half of that three
Speaker 1: point eight billion being the work of North Koreans and
Speaker 1: then the rest being various other parties. I think a
Speaker 1: lot of those are still under investigation, but this relatively
Speaker 1: small apparently military intelligence hacking units has taken the vast
Speaker 1: majority of the sum of virtual currency last year. It
Speaker 1: seems like they really sharpened their focus on crypto because
Speaker 1: the year before, hacks attributed to Lazarus, which is what
Speaker 1: they're called, were like less than five hundred million dollars, right,
Speaker 1: that's a pretty dramatic increase. Like what's driving that, It's
Speaker 1: difficult to know from sitting outside Telligence Agency. It seems
Speaker 1: like they were successful and they found a way to
Speaker 1: do it, and they're going to continue to do it.
Speaker 1: If you think back to previous generations, we know that
Speaker 1: North Koreans were accused of counterfeiting cash, you know, American
Speaker 1: US dollars and using that in the black market to
Speaker 1: raise money. We know that they have a history of
Speaker 1: using counterfeit cigarettes and kind of propping up a lot
Speaker 1: of that trade over the past couple decades. Cryptocurrency seems
Speaker 1: to be their next mL And is that because people
Speaker 1: in crypto are like uniquely prone to being bamboozled? Is
Speaker 1: it because the crypto company security isn't great? Is it
Speaker 1: kind of a culmination of things. I think there's a
Speaker 1: scramble to get rich in crypto. Certainly over the past
Speaker 1: couple of years. I think that has led to a
Speaker 1: reduction in the amount of perhaps scrutiny that people are
Speaker 1: putting on different projects and really rushing to kind of
Speaker 1: monetize in this space. There's a new currency we have
Speaker 1: to jump on this, there's a new market. We have
Speaker 1: to jump on this. There's lot of speculation, as you
Speaker 1: know better than anyone, and North Korea is honing their
Speaker 1: craft at really inserting themselves into that process. Well, so
Speaker 1: that point, you know, I think a lot of folks
Speaker 1: have this very stereotypical idea that all hacking is just
Speaker 1: like someone probably a dude, hovering in front of a
Speaker 1: computer in which like green text on a black background
Speaker 1: is flashing before their very eyes. But you've also reported
Speaker 1: on the ones that like there are folks doing fake
Speaker 1: interviews to try to get intelligence at crypto companies, say
Speaker 1: more about some of these strategies. Yeah, that kind of
Speaker 1: hacker in abasement stereotype is no longer the case. There
Speaker 1: have been US indictments against alleged North Kreen hackers, while
Speaker 1: one came out in twenty twenty one that was really
Speaker 1: revelatory in some of the scope of these efforts. These
Speaker 1: are professional soldiers who spend their lives going to international
Speaker 1: competitions abroad. They are working very carefully night and day
Speaker 1: to get as good as they can at using Western
Speaker 1: languages online. They're very good at programming. It's the same
Speaker 1: kind of programming that you would learn at Stanford or
Speaker 1: Harvard in a kind of coding program. And the reason
Speaker 1: that they're so motivated and the reason that they're so
Speaker 1: crafty is because a lot of their life depends on it.
Speaker 1: They are supporting families, you know, according to an analysis
Speaker 1: of these some of these charges that have come out
Speaker 1: against these alleged hackers, but they're really prolific and they're
Speaker 1: incredibly focused. I had a researcher tell me one of
Speaker 1: the reasons they're so good at using fake resumes, for instance,
Speaker 1: or searching on LinkedIn or indeed for job data they
Speaker 1: can kind of use for themselves is because they need
Speaker 1: to do it. There's not a lot of other options
Speaker 1: that they have to raise revenue online. You know. One
Speaker 1: person mentioned to me that they are doing a lot
Speaker 1: more with a lot less than other hacking groups have
Speaker 1: in terms of technology. Coming up more from Bloomberger posts
Speaker 1: Jeffstone on record breaking cryptoffs. We'll be right back. One
Speaker 1: of the other things that I find interesting about what
Speaker 1: you're describing in terms of like these motivations, you know,
Speaker 1: these are folks with families, These are folks who are
Speaker 1: who are trying to survive. It also seems to me
Speaker 1: that it doesn't seem to be slowing down at all,
Speaker 1: you know, like the numbers are getting bigger every single time,
Speaker 1: like year over year these reports are coming out. Is
Speaker 1: there any way to stop any of this? There's not
Speaker 1: an obvious way to stop it. We know the Department
Speaker 1: of Treasury is engaged in kind of an information tour
Speaker 1: to ensure that organizations, particularly in the cryptocurrency world and
Speaker 1: the financial world and the technology sector, have a stronger
Speaker 1: understanding of what's happening. A lot of your listeners will
Speaker 1: be familiar with the sanctions against Tornado Cash and Blender,
Speaker 1: which are some of these mixing services that these actors
Speaker 1: have used to launder cryptocurrency. We know, according to recent
Speaker 1: reports from just recently, there is a new service called
Speaker 1: Sinbad that has allegedly used to you know, convert a
Speaker 1: lot of these transactions in a way that is more
Speaker 1: difficult for law enforcement and for independent security researchers to track.
Speaker 1: So those are all really subtle but important indications that
Speaker 1: this phenomenon is going to continue, if not accelerating. You know.
Speaker 1: One of the things that people I remember, I grew
Speaker 1: up in the ins and as am of the generation
Speaker 1: that was like, you know, forget hotmail I had I
Speaker 1: had accounts before hotmail existed. It would be like, don't
Speaker 1: click any links, don't give anybody your credit card details.
Speaker 1: How do you defend against someone who is pretending to
Speaker 1: be not a North Korean hacker in a job interview,
Speaker 1: or who is engaging in some of the more sophisticated
Speaker 1: techniques like cloning your simcard? Like is there anything a
Speaker 1: person can do if even governments configure this out. The
Speaker 1: short answer is no, Unfortunately for a lot of investors
Speaker 1: and a lot of people who might find themselves even
Speaker 1: as the targets of surveillance. A little bit outside this conversation,
Speaker 1: but if there's a nation state hacking group that is
Speaker 1: specifically targeting a certain individual or perhaps in exchange, they
Speaker 1: have the means and motive and opportunity and probably the
Speaker 1: orders to make that happen. You might log into your
Speaker 1: personal cryptocurrency website and it looks completely legitimate, just like
Speaker 1: it did yesterday, asks you to insert your user name
Speaker 1: and password, and you do that, and then you find out,
Speaker 1: once your cryptocurrency is gone, that that was a fake
Speaker 1: page that was the product of eighteen months of reconnaissance
Speaker 1: and intelligence gathering and a really careful attack designed to
Speaker 1: take over as much as they possibly can. I mean,
Speaker 1: hearing things like that is one of the reasons folks
Speaker 1: are like everybody should have a cold wallet and you know,
Speaker 1: only access your crypto and computers that are not connected
Speaker 1: to the Internet. That has never felt like a scalable
Speaker 1: solution for the cryptocurrency world. I mean that advice that
Speaker 1: you're describing sounds to me like the cryptocurrency world is
Speaker 1: experiencing some of the pain that the rest of the
Speaker 1: Internet has gone through. When it comes to changing your
Speaker 1: passwords frequently and making sure that you're not reusing the
Speaker 1: same user name credentials across the Internet. It's a very
Speaker 1: difficult problem to solve, so a lot of organizations are
Speaker 1: not offloading that risk onto users but kind of saying,
Speaker 1: you know, those are subtle ways of saying, we can't
Speaker 1: completely protect you. Here's a couple things that you might
Speaker 1: be able to do, but again, it's just very difficult.
Speaker 1: Everyone has busy lives. You can't change your password and
Speaker 1: write it down every day. You have to be able
Speaker 1: to trust systems at a certain point in kind of
Speaker 1: hope that you're not taken for all your worth. You know,
Speaker 1: it's so interesting that so many of these conversations come
Speaker 1: back to trust, because one of the problems of crypto
Speaker 1: was supposed to solve is not having to trust anything
Speaker 1: or anybody, And here we are again talking about having
Speaker 1: to trust systems, just as a kind of a closing question,
Speaker 1: as somebody who has covered cybersecurity for a long time
Speaker 1: and is now kind of a crypto reports as a
Speaker 1: result of that. I really like the analogy that you
Speaker 1: made of you know, this is a problem that's been
Speaker 1: experienced in any other domain that is connected to a
Speaker 1: computer or a silver anywhere in the world. Are there
Speaker 1: things that other domains have done that have helped at all?
Speaker 1: Or is it really just like an intellectual arms race
Speaker 1: over who's going to be more sophisticated, you know, like
Speaker 1: Red team Blue team kind of stuff. The smartest thing
Speaker 1: that you can do is use multi factor authentication. You know,
Speaker 1: from an individual standpoint, it's not going to solve every problem,
Speaker 1: but from an individual standpoint, you want to make sure
Speaker 1: that when you're logging into a website with your password,
Speaker 1: that website verifies you that you are who you say
Speaker 1: you are in a different way, whether that be through
Speaker 1: a text message, which is not the most reliable example anymore,
Speaker 1: or a phone call or a QR code. Make sure
Speaker 1: that that is on all of your accounts, and try
Speaker 1: to be mindful about how far and wide the services
Speaker 1: that you're signing up to are. That's to say, don't
Speaker 1: sign up to every other thing. Try to keep things
Speaker 1: relatively concentrated under your control so that it's not a
Speaker 1: huge shock when in two years a website that you
Speaker 1: completely forgot about is breached in your information spills out. Yeah,
Speaker 1: I mean a couple of weeks ago, I got an
Speaker 1: email from a stationary websites like they literally print cards
Speaker 1: and envelopes, and they're like, so sorry, your information has
Speaker 1: been revealed for the entire incident. I was like, are
Speaker 1: you kidding me? Let me ask you this. When you
Speaker 1: read that, were you like, were you just like of course,
Speaker 1: or were you like, you're not even shocked anymore? Right,
Speaker 1: I'm not even shocked anymore. I mean I think after
Speaker 1: like the big Experience debacle in the United States, which
Speaker 1: you know is that that is a company with literally
Speaker 1: one job right, just identity prosection and they were like oopsie.
Speaker 1: So it can feel really demoralizing that It's like, you
Speaker 1: know you, you're screaming into the void of I'm trying
Speaker 1: so hard and yet I wish I had better news. Sorry.
Speaker 1: You know, so much of being a reporter is like,
Speaker 1: let me tell you how bad it is. So sorry, Yeah,
Speaker 1: especially lately. Well, Jeff on that cherry note, thank you
Speaker 1: as always for coming on the show. Thank you such
Speaker 1: a fan. That was Bloomberg Report to Jeff Stone. You
Speaker 1: can find more of his reporting on the Bloomberg Terminal
Speaker 1: and on Bloomberg dot com. And don't forget to sign
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