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Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News,

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Speaker 1: and this is Bloomberg Crypto at Daily Bloomberg. I heard podcast.

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Speaker 1: It's Tuesday, August sixteen. In late July, allegations surface that

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Speaker 1: some North Koreans were plagiarizing online resumes to try to

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Speaker 1: trick companies, including crypto companies, into hiring them. It was

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Speaker 1: all part of a broader effort to raise money from

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Speaker 1: North Korea's government weapons program and an attempt to help

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Speaker 1: the authoritarian nation evade global sanctions. But how did North

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Speaker 1: Korea get so good at tricking crypto employers? And what

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Speaker 1: does all of this mean for the security of these companies?

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Speaker 1: This is geopolitics, and there's a lot of ugliness to this,

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Speaker 1: But some of these tactics are really innovative. I mean

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Speaker 1: they're very impressive. Bloom of reports to Jeff Stone joins

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Speaker 1: me today to explain. Jeff, what a pleasure. Thank you

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Speaker 1: so much for being here, Thank you for having me.

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Speaker 1: So what is it you do at Bloomberg? I read

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Speaker 1: about cybersecurity, which is a busy task. It's a collision

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Speaker 1: of crime and espionage and business and money and theft

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Speaker 1: it's endlessly fascinating. That sounds fun even writing a lot

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Speaker 1: about North Korea and hackers. What are North Korean hackers

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Speaker 1: up to in crypto? They are similarly busy in crypto.

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Speaker 1: According to the United States, that is, North kreen hackers

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Speaker 1: increasingly are focusing on on cryptocurrency services as a means

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Speaker 1: of generating money on behalf of the government of Kim

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Speaker 1: Jong Un. According to the US government, that is and

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Speaker 1: um independent cybersecurity researchers. That means they are looking at

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Speaker 1: everything from hacking exchanges. They're also impersonating people. They are

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Speaker 1: sending fake jobless things and pretending to be people who

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Speaker 1: they aren't in or to get as much information as

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Speaker 1: they possibly can about the world of virtual currency. So

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Speaker 1: I'm a North Korea hocko. I look up somebody's linked

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Speaker 1: in profile. Thought person seems like they have a fancy

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Speaker 1: job at a fancy crypto company. I steal some of

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Speaker 1: their credentials. I present them as my own. I try

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Speaker 1: to interview at name and exchange. In the process of

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Speaker 1: that interview. What am I doing. I'm trying to get

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Speaker 1: information out of them. It's kind of like, you know, spying,

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Speaker 1: or is it something else? You're doing two things. I

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Speaker 1: think you're you are trying to get as much information

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Speaker 1: as you possibly can from the person that you're speaking with,

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Speaker 1: because that just might help you if you don't get

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Speaker 1: the job. You also are trying to get the job.

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Speaker 1: According to the researchers that we have spoken with, they

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Speaker 1: have observed freelance contractors if you will secure employment at

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Speaker 1: some of these services. We don't know which services candidly,

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Speaker 1: but um, if they are involved in some of these

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Speaker 1: bridge projects, for instance, or the future of Ethereum, that

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Speaker 1: gives them not only a salary, which according to one

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Speaker 1: recent US governmental alert, could be as much as dollars

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Speaker 1: crypto Paz, and also it also does bring the espionage angle,

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Speaker 1: as you just alluded to, like, yeah, we can kind

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Speaker 1: of share this information in our country and use this

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Speaker 1: to kind of get around some of these sanctions. Right,

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Speaker 1: So I'm not only interviewing because I want to get

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Speaker 1: stuff out of my interview. I'm interviewing because, as you say,

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Speaker 1: I'm actually trying to work there and find even more

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Speaker 1: stuff outs. Right, And if you don't get the job

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Speaker 1: or if you get fired, it's probably not the end

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Speaker 1: of the world, because you're you're you're already employed. Yeah, right,

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Speaker 1: wild Now. So North Korea, when did they first start

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Speaker 1: realizing the kind of crypto could be a meaningful revenue

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Speaker 1: generator for them. It's difficult to peg that to a

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Speaker 1: specific date, but some of the conversations that we've had

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Speaker 1: indicate this would have happened probably four or five six

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Speaker 1: years ago. You might remember the Bangladesh Bank heist um

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Speaker 1: there was a number of financial, big financial hacks. They

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Speaker 1: tried to steal a billion dollars from the Bangladesh Bank

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Speaker 1: um central Bank via the Swift network. Bangladesh, the central bank,

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Speaker 1: which is pretty vulnerable to a cyber attack, has been attacked.

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Speaker 1: It is a murky story, and it's a murky story

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Speaker 1: about vulnerability, and it's about cyber Two sort of transactions.

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Speaker 1: The first one was about eighty one million U S dollars.

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Speaker 1: There was another attempted transaction nearly a billion dollars. People

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Speaker 1: look at this and I think this is very, very shady. Indeed,

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Speaker 1: that was kind of a big watershed moment in the

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Speaker 1: world of financial security. A lot of banks started to

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Speaker 1: kind of improve the way that they were verifying that

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Speaker 1: users are who they say they are, so right around

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Speaker 1: that time is when cryptocurrency started to become more real.

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Speaker 1: Last year, we know according to analysis, for instance, UM,

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Speaker 1: some of these North Korean hackers were involved in like

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Speaker 1: seven hacks. We've already seen that, you know, significantly more

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Speaker 1: and raising more money in the first half, so you know,

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Speaker 1: you say, there there is even more money in this year,

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Speaker 1: Like what are the sums that we're talking about? According

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Speaker 1: to public charges, at least the Lazarus Group, which is

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Speaker 1: North Korea's state sponsored hacking organization, took as much as

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Speaker 1: six hundred million dollars in the hack on Xi Infinity

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Speaker 1: and March. That's already significantly more than they are accused

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Speaker 1: of stealing last year, which was four hundred million dollars UM,

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Speaker 1: and there have only been more incidents since then. The

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Speaker 1: blockchain company Harmony said in June attacker stole an additional

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Speaker 1: hundred million dollars and um, there's Nomad breach, which is

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Speaker 1: still an investigation, but attackers stole a million from bridge

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Speaker 1: protocol tool there. So again it's hard to pin it

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Speaker 1: down to its specific figure, but it's it's significantly we've

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Speaker 1: seen that's that's a lot of money, and all of

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Speaker 1: those are hacks that are big enough for you know,

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Speaker 1: us to cover them here at Bloomberg. So there's certainly

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Speaker 1: things that we're paying attention to. Well, what I'm getting

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Speaker 1: from you is it sounds like the North Korean hackers

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Speaker 1: are good at their jobs. Sure, let's talk about the

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Speaker 1: people who seem to need to be better at their jobs. Like,

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Speaker 1: I'm a recruiter. Why am I getting spoofed by somebody

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Speaker 1: with a fake resume? Like? What's going on? It's hard

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Speaker 1: to find people? Just you know, this is not a

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Speaker 1: problem that's limited to crypto. We know this is happening

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Speaker 1: in other industries, the technology industry, software development, but crypto

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Speaker 1: specifically is really being targeted. I think that it's also

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Speaker 1: as they are trying to find the right people. Um,

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Speaker 1: you do have to take steps to be more flexible

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Speaker 1: in terms of allowing remote work for instance. Or I

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Speaker 1: was gonna say, like, are these folks flying from North

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Speaker 1: Korea to the US. Not that we're aware of, but

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Speaker 1: you know, there is a small number of people who

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Speaker 1: have these skills, as you know, and um, as they

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Speaker 1: as they try to find the right people, you kind

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Speaker 1: of need to make certain allowances. Maybe someone doesn't sound

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Speaker 1: quite right on the phone, but Hey, they have this

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Speaker 1: this skill and they're willing to take this salary for

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Speaker 1: um X number of dollars, so we can't find anybody

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Speaker 1: else to do it. So Okay, I'm a recruiter. I'm stressed,

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Speaker 1: I'm busy. I have some CEO being like hire more people.

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Speaker 1: I'm hiring more people. Fine, humans make mistakes. But the

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Speaker 1: thing that seems bigger to me is the fact that

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Speaker 1: these as you describe them, crypto bridges, which you can

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Speaker 1: think of as like protocols that let you move crypto

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Speaker 1: from one thing to another thing, and you know, a

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Speaker 1: highly simplified version of what's going on, these things get

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Speaker 1: hacked a lot for a lot of money, fairly frequently.

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Speaker 1: And that's before you get to the other like completely

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Speaker 1: run of the mill scams like fishing or spoofing. As

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Speaker 1: an as an industry, is crypto getting better at its

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Speaker 1: security practices, From like your perspective of someone who's covered

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Speaker 1: this more broadly, from my perspective, it is not. Candidly.

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Speaker 1: We talked about the Bangladesh bank hast a few years ago,

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Speaker 1: there was a number of big financial hacks. I would

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Speaker 1: expect personally this first six months of this year to

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Speaker 1: really be kind of you know, no industry can stand

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Speaker 1: to lose x number billion dollars a year. It's it's embarrassing.

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Speaker 1: It creates you know, there's the issues that have to

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Speaker 1: do with trust, which obviously so much of um the

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Speaker 1: root of this industry. So to lose so much money

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Speaker 1: so quickly, we know that real people are are really

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Speaker 1: losing significant amount of cash. And we're we're hearing candidly

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Speaker 1: from people who are trying to get more into crypto

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Speaker 1: and see it as a investment opportunity and something cool

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Speaker 1: and new and interesting to think about. And it's hard

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Speaker 1: to know the difference between scams and real services because

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Speaker 1: the names and you know, it's it's just really scary

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Speaker 1: to hear about these massive dollar figures. Yeah, and this

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Speaker 1: is this is an industry that loves to say, you know,

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Speaker 1: do your own research, but it sounds like even the

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Speaker 1: people who are doing their research are still getting into trouble.

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Speaker 1: Is there is there kind of a degree of sophistication

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Speaker 1: that's being deployed against these companies or is it you know,

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Speaker 1: much more run of the mill. It is it is

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Speaker 1: as run of the mill as a typical email scam

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Speaker 1: that you might have seen against a bank um a

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Speaker 1: few years ago. We previously have have written about some

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Speaker 1: instances where these crypto scammers were hijacked Twitter accounts for instance.

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Speaker 1: Those Twitter accounts will be off to be verified. They

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Speaker 1: belong to real people and often like heads of state,

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Speaker 1: you know, very specific people on the internet. Yet great example,

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Speaker 1: they are soliciting donations. They are raising a ton of

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Speaker 1: money in a very short amount of time, even before

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Speaker 1: those crypto scams are removed from Twitter. So you know,

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Speaker 1: I think there's some board a activity earlier this year

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Speaker 1: that was fraudulent, or yeah, the board of Instagram got

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Speaker 1: hacked because of you know, probably like social engineering. Somebody

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Speaker 1: clicked on a link they shouldn't have clicked on. Social

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Speaker 1: engineering is not complicated stuff. It's it's sending a fake

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Speaker 1: text message that looks real that tricks the wrong person

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Speaker 1: into providing their user name password. You only need to

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Speaker 1: do it successfully once in order to make a lot

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Speaker 1: of money. So you know, as an example of that,

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Speaker 1: I get constant text messages like pretending to be this

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Speaker 1: is chased and you need to change your password, and

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Speaker 1: here's this really skeptical looking link that you should click

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Speaker 1: on and give us all your information. But it can

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Speaker 1: also be you know, somebody calling someone up and saying, hey,

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Speaker 1: I work here and I've locked myself out of my password?

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Speaker 1: Can you help me reset it? That seems to happen.

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Speaker 1: We've also you all have also been reporting on things

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Speaker 1: sim swapping, which sounds fun like, what does that mean? Exactly? Well,

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Speaker 1: sim swopping is endlessly fascinating. Similarly broadly defined um it

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Speaker 1: involves you losing control of your phone number. So if

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Speaker 1: you have your forgot passwords set up so that if

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Speaker 1: you can't remember your credentials, it will send a text.

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Speaker 1: It will send a text to your phone. If someone

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Speaker 1: identifies you as a particularly valuable target, they will call

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Speaker 1: the phone company. There have been public charges, for instance,

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Speaker 1: of crypto scammers or sim swappers, I should say bribing

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Speaker 1: customer service employees at cell providers. A T T had

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Speaker 1: a major problem with this a few years ago. There

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Speaker 1: have been a number of indictments against former A T

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Speaker 1: T employees. They're not paid a lot of money when

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Speaker 1: they're working in a retail store. It is as simple

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Speaker 1: as bribing a retail employee to m make this change

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Speaker 1: to someone's phone account. You take over their number. You

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Speaker 1: then have access to their best words. So anybody who's

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Speaker 1: texting me, whether that is you know, my Gmail rees

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Speaker 1: set or like my friends in the group text, that's

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Speaker 1: all going to somebody else's phone. It's that's correct. You

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Speaker 1: can access your phone at all, you can't access any

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Speaker 1: of your apps or your accounts. I should say that's

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Speaker 1: not a problem with crypto necessarily, it's a problem with

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Speaker 1: the way that users are authenticated typically in the United States,

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Speaker 1: is not a problem as much elsewhere, but the way

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Speaker 1: that our phone numbers have become social security I was

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Speaker 1: going to say the same thing, they are super important,

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Speaker 1: and that that is a real vulnerability that people are

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Speaker 1: learning to exploit and make a lot of money rapidly.

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Speaker 1: We'll be right back with more from Bloomboog Reports at

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Speaker 1: Jeffstone on the threat of North Korea and crypto. Is

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Speaker 1: there anything that has proven effective against these crypto hackos

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Speaker 1: and scammas, especially the North Korean groups. The problem with

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Speaker 1: trying to stop some of these attacks in these campaigns

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Speaker 1: is they are developing as quickly as this technology. Some

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Speaker 1: of the kind stations that we had recently with folks

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Speaker 1: from mandy It, for instance, indicated that no longer are

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Speaker 1: these hackers just targeting end users. They're no longer just

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Speaker 1: targeting the exchanges. They are now trying to get jobs

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Speaker 1: with these bridge services, for instance, and get an edge

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Speaker 1: into um some of the changes to Ethereum that might

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Speaker 1: be coming up. So I don't think there is any

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Speaker 1: silver bullet to solving these issues. It's just a matter

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Speaker 1: of constant diligence and really I think adopting the mentality

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Speaker 1: that you are vulnerable and people are trying to get

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Speaker 1: in there in ways that maybe you didn't expect. I

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Speaker 1: know that's not super helpful, but it's what we're seeing. Well.

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Speaker 1: Certainly one of the other things that we're starting to

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Speaker 1: see is that the US government is really cracking down,

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Speaker 1: you know the recently the U. S. Treasury Department issued

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Speaker 1: sanctions on something called a crypto mixer. And if if

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Speaker 1: you think about what a crypto mixer is, it's a egine.

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Speaker 1: You have, you know, some bitcoins, some Ethereum, some she

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Speaker 1: but you knew some doge and you want to, shall

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Speaker 1: we say, obscure the origin of those various bits of

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Speaker 1: currency and where you got them from. You would put

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Speaker 1: them into a mixer, which effectively like anonymizes those transactions

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Speaker 1: and spits out something that's a little bit harder to trace.

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Speaker 1: You can imagine that services like that might be very

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Speaker 1: attractive to say, North Korean hackers, And so what what

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Speaker 1: what is the U. S Treasury Department been trying to

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Speaker 1: do with these services? They're trying to stop North Korean

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Speaker 1: hackers from using them in whatever way they that they can.

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Speaker 1: What's particularly interesting about this is the way that these

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Speaker 1: mixing services have become kind of an extension not in

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Speaker 1: every case, in some cases, according to the US government,

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Speaker 1: though they have become an extension of this larger UM

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Speaker 1: cybercrime issue. You know, we we've saw as recently as

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Speaker 1: as earlier this year allegations that a different mixing service

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Speaker 1: was used, particularly for ransomwares. So, um, it's not only

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Speaker 1: this kind of large scale crypto AFT, it's when something

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Speaker 1: is taken via extortion, they can you know, kind of

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Speaker 1: run it through some of these UM mixing services to

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Speaker 1: kind of hide their activity in a more effective way.

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Speaker 1: And of course the goal of that is to make

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Speaker 1: it harder to trace those funds and ever get them

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Speaker 1: back for the people who have been scammed have to

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Speaker 1: extort it. Yeah, like you said, pretty much an arms race.

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Speaker 1: It is very much as an arms race. It's very

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Speaker 1: interesting in the U. S. Government. Look, I don't think

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Speaker 1: a few years ago, UM, I'll speak for myself, I

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Speaker 1: didn't expect the United States to move as quickly as

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Speaker 1: they have in terms of trying to combat some of

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Speaker 1: this stuff. We've seen some really big seizures over the

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Speaker 1: past year or so that UM not long ago would

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Speaker 1: have been obviously significantly more difficult. We know they're trying

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Speaker 1: to staff up very rapidly. Is there anything else that

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Speaker 1: has surprised you other than perhaps the size and frequency

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Speaker 1: of these hacks, like you, as a reporter in cybersecurity,

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Speaker 1: suddenly now having to get up to speed on what

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Speaker 1: a bridge is and what it makes. Yes, that has

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Speaker 1: been that. Thank you for pointing that out. That's one's

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Speaker 1: extremely surprising to me. I didn't expect that. But the

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Speaker 1: way that these suspected North Korean hackers are attuned to

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Speaker 1: the culture of not only Western culture and the US,

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Speaker 1: but really like Silicon Valley, there was there was research

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Speaker 1: that came out from Google UM not long ago indicating

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Speaker 1: that that this group, the Lazarus group, this is the

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Speaker 1: same group that carried out the Bangladesh bank heist. The

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Speaker 1: same group that targeted Sony Pictures years ago and released

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Speaker 1: all of those emails and um inspired a condemnation from

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Speaker 1: former President Obama. The same group is now like creating

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Speaker 1: fake versions of Indeed dot com creating fake versions of

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Speaker 1: a Disney careers page, and they're using those in really

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Speaker 1: targeted espionage operations to get a little bit of information

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Speaker 1: from a very small, specific set of targets and it works.

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Speaker 1: So is really um, you know, this is crime, and

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Speaker 1: this is this is geopolitics, and there's a lot of

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Speaker 1: ugliness to this and obviously the North Korean government being

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Speaker 1: what it is, but some of these tactics are really innovative.

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Speaker 1: I mean they're very impressive and very there. They are surprising.

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Speaker 1: No wonder they're get hired by crypto companies. Yeah right,

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Speaker 1: it's kind of joke. That's a true story. Well, thank

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Speaker 1: you so much for being on the podcast. I really

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Speaker 1: appreciate you taking the time. Thank you for having me.

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Speaker 1: I'm such a fan. You can find more of Jeff

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Speaker 1: stones reporting on the Bloomberg Terminal on Bloomberg dot com

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Speaker 1: or follow him on Twitter. He's at Jeff Stone five hundred.

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Speaker 1: On the next episode of Bloomberg Crypto. Cars, especially luxury cars,

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Speaker 1: have always been a marker of wealth, but for many

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Speaker 1: crypto investors, no single car has driven so much interest

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Speaker 1: as the Lamborghini. To better understand how the Lambo came

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Speaker 1: to be one of the most visible status symbols in crypto,

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Speaker 1: I'll be joined by Bloomberg Report to Hannah Miller and

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Speaker 1: crypto venture capitalist Peter Saddington. This is Bloomberg Crypto, a

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Speaker 1: daily podcast from Bloomberg and I Heart Radio. For more

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Speaker 1: shows from I Heart Radio, visit the I Heart Radio app,

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Speaker 1: Apple Podcasts, or wherever you get your podcasts. Send us

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Speaker 1: your comments, questions, or suggestions for the show to Crypto

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Speaker 1: at Bloomberg dot net or find us on Twitter. We're

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Speaker 1: at Crypto. The supervising producer of Bloomberg Crypto is Vicky Vergalina.

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Speaker 1: Our senior producer is Janet Babin. Our producer is Shannon Barrero.

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Speaker 1: Associate producer is Thy Butler. Desta wonder At is our engineer.

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Speaker 1: Original music by Leo Sidrn. I'm Stacy Maria Shmal. We'll

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Speaker 1: be back tomorrow