Bitcoin Becomes Part Of North Korea's Geopolitical Arsenal

Tyler Durden's picture

Via OilPrice.com,

Fresh off the news of North Korea claiming that the United States has declared war due to U.S. President Trump’s military positioning and contentious rhetoric, a report from FireEye has suggested that the DPRK may be mining something other than coal.

With tensions at an all-time high, North Korea is looking towards new means of pursuing their economic and defensive goals, and following increased cyber-attacks on South Korean cryptocurrency exchanges, it may be possible that North Korea is eyeing bitcoin as a hedge against geopolitical turmoil or even a means of skirting sanctions.

While North Korea has only limited access to petroleum due to increased sanctions and zero proved reserves of its own, the country isn’t without resources. South Korean estimates suggest a possible trillions of dollars’ worth of rare earth minerals waiting to be dug up. These include iron ore, zinc, copper, graphite, gold, silver, magnesite, and approximately $9.7 trillion worth of coal and limestone.

North Korea’s increased belligerence, however, has put a damper on hopes to rebuild the country’s mining sector. As North Korea became increasingly aggressive, the UN began placing bans on the country’s metal exports. And this year, following the increase in weapons testing, the UN upped the restrictions, including fresh bans on coal, iron, and iron ore exports, with China soon following suit.

Now, North Korea is completely shut off from, or with very limited access to the import or export of nearly every conceivable commodity.

Many countries have even imposed harsher financial sanctions on North Korea as global pressure for action intensified. Japan and China have suspended all North Korean transactions and on Tuesday, September 26, the United States imposed greater sanctions, targeting North Korean financial institutions and regime members acting as representatives for the country’s banks in China, Russia, Libya and the United Arab Emirates

So not surprisingly, Kim Jong-Un is looking for a solution, and cryptocurrencies seem to have peaked his interest.

King Jong-Un’s regime is certainly no stranger to cryptocurrencies. Between 2013-2015, the country hacked South Korean bitcoin exchanges, stealing approximately 100-million won (nearly US$90,000) in Bitcoin every month. Additionally, the country was linked to the Lazraus Group which was reportedly behind the WannaCry ransomware that infected over 200,000 computers across 150 countries.

With the country’s tech-smart regime, and coal exports banned, North Korea may have found a use for its most abundant resource – bitcoin mining.

Recorded Future, an intelligence research firm backed by Google Venture and In-Q-Tel (a venture capital firm funded by the CIA), released a report on North Korean internet activity, including what was identified as the start of bitcoin mining by users on May 17.

In an interview with VOA Korean, Priscilla Moriuchi, the director of strategic threat development at Recorded Future explained: "We weren't able to determine the volumes, like how many bitcoin they can generate per certain time period. We could just see activity.” Moriuchi added that the intelligence firm had two hypotheses regarding the activity – the first being a group connected to the government, the other being an individual who had access to the internet.

Speculation leans to a connection to high-ranking officials in Kim Jong-Un’s regime, Moriuchi noted. Due to the limited access individuals have to the internet in North Korea, and especially the lack of expensive equipment necessary to pull off such a feat, it is likely that the government played a significant role in the mining activity noted by Recorded Future and In-Q-Tel.

North Korea’s biggest trading partner and de facto leader in the Bitcoin world, China, may also play some role in this developing story.

The founder of Bitcoin NYC Meetup, Jonathan Mohan, noted: "It wouldn't surprise me if, perhaps, hypothetically, North Korea were to have pre-existing business relationships in China that wouldn't mind purchasing bitcoin from them, and then just disseminating it to the Chinese market as you would with any other bitcoin."

Interestingly, this string of news comes just after China’s clamp down on cryptocurrencies, with many of its major exchanges planning to shut down at the end of the month. CNBC has noted that the Chinese general administration of customs did not respond to requests for comment.

“North Korea using these technologies is not exactly a loophole to the sanctions — that could be overstating the power of bitcoin itself,” Yaya Fanusie, a former CIA counterterrorism analyst, told The Washington Times. “But you have a cat-and-mouse game evolving, and this is just the type of emerging technology that the [U.S. intelligence community] needs to develop expertise to understand."

As geopolitical rules and boundaries become grayer, how this situation unfolds will surely be something to keep an eye on.

Luke McNamara, a researcher at FireEye and author of the September 11 report notes “There are variety of things they could do to cash out.”

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Joebloinvestor's picture

Kim, you can't counterfeit bitcoin like you can the US dollar.

Croesus's picture

Pro BtC = Pro Nork? Whodathunkit? DotGovs have their social headshrinkers workin' OT

tmosley's picture

Pro BTC = anti NWO. For good and for ill.

tmosley's picture

You REALLY need to lear what the word "fiat" means in reference to currency.

If ANYONE can create it, it isn't fiat. Period.

VWAndy's picture

 What matters is who controls its value.

VWAndy's picture

 Why GS controls its value. Same as paper gold.

tmosley's picture

RE: the "bet" from yesterday. Looks like gold is already losing badly. It now takes 3.43 oz of gold to buy a bitcoin vs (slightly under) 3.3 yesterday.

We'll see where we are in 6 days!

giovanni_f's picture

This is why the dollar is such a hyper-phantastic store of value. Strictly limited circulation, backed by a demonstrably incorruptible government promise and operatively protected in the market against all evil forces inside and outside the US with a daily twitter intervention by the Dotard-in-Chief in personam.

tmosley's picture

That would be the market. There are too many exchanges for pricing power to be captured by any one entity. Price tracking services won't even take into account data from exchanges that have any sort of odd practice, like feeless trades. Unlike the frontrunning johns and pimps at the COMEX and the price fixers in London.

Soul Glow's picture

HEY GUYS!  I JUST CAME OUT WITH A NEW CRYPTCURRENCY!  IT'S CALLED GLOW COIN!  IT'S WORTH IT'S WEIGHT IN...IN CRYPTCOIN!  IT IS GOING TO MAKE US ALL RICH!  PLEASE BUY SOME AND LET'S ALL BECOME MILLIONAIRES!

tmosley's picture

Why do you feel the need to post garbage like this?

Raffie's picture

His brain cell felt the need to be ignornat to curry favor with the like minded kids.

VWAndy's picture

 Funny that you would go there rather than making a point.

buzzkillb's picture

New garbage crypto coins are coming out daily. And those are all pretty much worthless. Yet Bitcoin and some other crypto has been on a longterm up. What's your point?

VWAndy's picture

 Its true value is 0.

eforce's picture

This could welcome a crack down by the West on crypto currencies if this becomes NK's sole life line.

kochevnik's picture

After extinction level event you will be correct

VWAndy's picture

 If it comes to that so be it.

tmosley's picture

The market disagrees with you.

VWAndy's picture

 Thats a pretty big assumption on your part. Why would you assume such a thing? With fiat they can simple manipulate every exchange just like they do with gold prices.

Soul Glow's picture

Tmose believes what Tmose wants to believe.  It's like anything else.  Gold bulls will believe that soon power grids will fail and we will trade bits of silver for bread and wine.  Dollar bulls view the US as the forever powerful nation-state.  And bitcoiners view their zeros and ones as safe from all governments.  It's all a game.  Money is just a game.

tmosley's picture

Channeling The Comedian, are we?

tmosley's picture

You don't understand the mechanics behind market manipulation. If the market sees governments printing money to buy other forms of money, the market punishes that government severely. This is what happened when Zimbabwe printed zimbux to buy Dollars and Euros.

They can only realistically manipulate markets via corruption. Frontrunning, issuing of unlimited paper, etc. Those things are not possible with BTC, again, because there are numerous exchanges, all of which are in competition with each other, and there are numerous watchdogs looking for things like that.

VWAndy's picture

 Thats the same argument gold bugs use. Its wrong for the same reason. You really should not be measuring things values with rubber bands.

tmosley's picture

I don't understand what you are trying to say here. What argument do you think I am using, and how do the goldbugs use the same argument? Be specific.

VWAndy's picture

 ok i will explain my understanding.

 Golds value is manipulated. By team fiat. They can and do run its price in dollars up and down at will. There is nothing to stop team fiat from doing the same things with fanta coins of any flavor. By buying up or selling off large volumes of fanta coins. Thus controling its actual value to something other than 0. Its true value is when all is said and done 0.

 Try thinking of values in joules of energy. Measure it all with a fixed true value and things should be much clearer. I do grok that if you are still thinking in fiat terms it looks pretty good. Team fiat also messes with energy prices but not energies value.

tmosley's picture

>Golds value is manipulated. By team fiat. They can and do run its price in dollars up and down at will. 

Correct.

> There is nothing to stop team fiat from doing the same things with fanta coins of any flavor.

Incorrect. They don't control the exchanges like they do with gold. They fundamentally CAN'T because it is EASY to set up your own exchange. Trivial, even.

>Team fiat also messes with energy prices but not energies value.

Not really. Oil is WAAAAYYYYY too big to mess with, and with far too many players demanding delivery. It would become immediately apparent in the FOREX market if they were.

wise_owl_says...'s picture

been trading BTC since its inception. i saw greater fools and got a nice ride from it. huge gains got converted into real money AU and AG immediately. rest goes to beer fund. i have been scammed many times in BTC market. it is BS just like you mr nosley.

kochevnik's picture

You are doing something wrong. Better to work sober

Mr_Potatohead's picture

The Achilles heel for bitcoin is the same as it is for precious metals: value is determined solely by the price somebody is willing to pay (usually with fiat currency) at the margins. If nobody wants to buy and everybody wants to sell, the price drops quickly. Metals and many other commodities have been ravaged by the paper markets, but metals probably are not going away any time soon as a store of value.  Bitcoin is too new to know exactly how the manipulation will occur, but methinks it's only a relatively short time before the guys calling the shots make it known how they're going to control cryptos.  (Government orders to convert private crypto into IMF crypto by a variety of means seem most likely.)    The big question for me is whether bitcoin and other private cryptos can survive this.

Unlike metals, where no technology exists (either now or in the foreseeable future) for cheaply producing meaningful amounts of precious metals from inexpensive feedstocks, bitcoin and its use seem extremely vulnerable to technological advances or attacks on multiple fronts.  For sure, metal detectors at borders can detect gold up somebody's butt and not your secret codes for crypto.  But how do you spend your cryptos after crossing the border if nobody wants to accept them at the price you paid or if your attempts to effect an electronic transaction get intercepted by the guys who vacuum up everything sent electronically?  When Roosevelt confiscated US gold, most people complied.  For those who weren't, he was patient.  Ask somebody who's parent or grandparent lived through this.  If you opened your safe deposit box after Roosevelt's order, somebody was present to give you a nice $20 bill for each gold coin. What's to stop the cryptocoin trading platforms from going along with the same kind of thing?  This is only one possible scenario.  There are many others and no way to anticipate the cleverness, deviousnees, tech savvy, political clout, or determination of sociopathic elites determined to maintain control.

Mike Hunt III's picture

To spend cryptos after crossing a border get to a decent sized city and trade your bitcoins for cash. See localbitcoins.com

tmosley's picture

>but methinks it's only a relatively short time before the guys calling the shots make it known how they're going to control cryptos

Wake me up when that happens.

Blue Dog's picture

From a Zero Hedge article:

http://www.zerohedge.com/news/2017-08-06/mysterious-trader-nearly-unlimi...

For those unfamiliar, spoofing is simple: it is the illegal practice of placing a large buy order just below other buy orders, or a large sell order just above other sell orders, then cancelling if it appears that the order is about to be hit or lifted. The idea is to make traders think that somebody with deep pockets is getting ready to buy or sell, in hopes of moving the market. If traders see a sell order of 2000 Bitcoin they may rush to panic sell before the whale crashes the price. And vice versa on the bid-side.

 

tmosley's picture

>If traders see a sell order of 2000 Bitcoin they may rush to

No, because everyone knows that that is going on. It doesn't have a persistant effect on the price like the issuance of unbacked paper.

malek's picture

The cryptoRETARD strikes again:

Orwellian redefinition of "fiat".

tmosley's picture

That was always the definition, retard.

Or can YOU print dollars for 4 cents each and spend them at par legally?

malek's picture

Really. Then the US Dollar is *NOT* fiat, because the Canadian government cannot print it legally??

The definition is AN ENTITY can create *their own* fiat in unlimited amounts for minuscule cost, but not that any entity can create any others' fiat, retard.

I can print my own fiat currency and then try to have other use/accept it.
And the system of Bitcoin was created by a single entity at a minuscule cost, and you or me can create our own cryptocurrency and try to ICO it.

Vincent Langley's picture
fiat money noun What It Is

Fiat money refers to any currency lacking intrinsic value that is declared legal tender by a government.

How It Works

As valid currency solely by virtue of a government declaration, fiat money is not backed by any commodity, such as gold, but only by the faith of the bearer. In this respect, unlike currencies backed by gold or silver, fiat money does not have any intrinsic value (e.g., paper money and much coinage). The U.S. dollar is an example of fiat money.

Why It Matters

Fiat money allows the declaring government to employ virtually any material, such as paper (which is lightweight and convenient for carrying), as a medium of exchange. However, since the value of fiat money lies solely in the faith of those using it, its value can be easily diminished and result in rapid inflation.

So the real question is: "Does bitcoin (for example) have intrinsic value?"

TeamDepends's picture

Do some research before posting something so ignorant.

Raffie's picture

Posting ignorant comments by the haters is all they can do. 

Researching could take a lot of time from them posting ignorant comments.

5000yl's picture

Fiat = "by government decree" or "by command"

VWAndy's picture

 GS=government decree

MagicHandPuppet's picture

When the globalist scum criminalize BTC, they'll use North Korea, terrorists and other outlaws as the ostensible reason.

Raffie's picture

Thank GOD the globalist and NK don't use gold/silver, other wise all of you would have to sell all your PM or be labeled a terrorist and support of terrorist currency.

MagicHandPuppet's picture

That day will come (again for gold)

Raffie's picture

They been yammering GOLD OVER $10K for a very long time... sooner or later in the distant future they are bound to get it right. 

Today is cryptos and not seeing any slow down of adoption. 

Watch, 10+ years from now will be cryptos and even then, will see no slow down. 

FreeShitter's picture

That day when you are 50? 60? 70? I like gold have some, but I do like to live in the now too.

Billy the Poet's picture

If the North Koreans can hack South Korean bitcoin exchanges and extract wealth then couldn't the NWO hack you?