Tether, Circle, Paxos, and Techteryx, four of the leading stablecoin issuers, have identified and frozen wallets associated with the Lazarus group, a North Korean hacking group. These wallets containing millions of cryptocurrencies are believed to be involved in laundering of funds from various cryptocurrency thefts.
The multiple cyber crime incidents orchestrated by the Lazarus Group is adding to the fear and skepticism regarding cryptocurrency. According to blockchain analyst ZachXBT, the blacklisted wallets hold around $4.96 million in stablecoins including USDT, USDC, BUSD, and TUSD.
Additionally, another $1.65 million of assets linked to these wallets have been frozen by several cryptocurrency exchanges. This makes the total amount of seized funds equal to $6.98 million. This blacklisting comes after the Lazarus Group reportedly hacked Indonesian cryptocurrency exchange, Indodax, to the tune of $22 million.
Circle Faces Criticism for Delayed Action
Tether, Paxos, and Techteryx have blacklisted the wallets immediately. Circle, the issuer of USDC, has been criticized for its delayed action. ZachXBT stated that Circle was delayed by four months, as compared to other issuers, in freezing wallets associated with Lazarus Group.
This has caused frustration within the crypto community especially due to the large sums of money being transacted. It is argued that if Circle had acted sooner, then Lazarus Group’s activities on the platform could have been halted.
This delay has brought back the debate regarding the efficiency of AML measures in the crypto space. The responsibility of stablecoin issuers in combating illicit activities is also being discussed. However, there is no official statement from Circle about this matter as of now.
The current situation has also raised the demand for enhanced regulatory measures and better AML measures within the stablecoin sector. The increasing activity of state-sponsored hackers such as Lazarus attacks is concerning. There is more demand for issuers to act faster and proactively when to identify and ban malicious accounts.
Continued Exploitation of Exchanges by the Lazarus Group
The recent $22 million hack forced the Indonesian cryptocurrency exchange, Indodax to suspend operations while it evaluated consequences. It is suspected that Lazarus Group was involved.
Even though the exchange has since resumed its operations, the attack demonstrates the group’s capability and reach. Despite the freezing of $6.98 million in stablecoins, experts continue to believe that is only a small part of the total funds generated through criminal activities.
As stablecoins are under the spotlight, the pressure on issuers to act faster to detect and freeze such wallets to stop further laundering transactions has been rising. Adding to the pressure, blockchain detective ZachXBT identified seven addresses with 891.13 Bitcoin worth approximately $61 million, also linked to the Lazarus Group a few months ago.
The blockchain community and regulators are searching for ways to stop malicious agents like Lazarus group from taking advantage of the decentralized nature of cryptocurrencies to carry out illicit activities. As investigations continue, stablecoin issuers and exchanges will have no choice but to enhance their AML measures and not allow these hacking groups to launder more funds.
