North Korea's Lazarus Group has $5M frozen in stablecoins

North Korea's Lazarus Group, one of the biggest criminal groups in the crypto world, has had nearly $5 million frozen by stablecoin issuers following an independent investigation by a blockchain sleuth.

ZachXBT, a prominent blockchain investigator, reported that all four stablecoin issuers – Tether, Circle, Paxos, and Techteryx – have frozen the funds after his investigation, which was published in April. The frozen funds now total almost $7 million, including additional amounts frozen by various exchanges.

According to ZachXBT, once all legal processes are completed, the frozen stablecoins can be returned to victims. He also criticized Circle, the issuer of the second-largest stablecoin by market capitalization, USD Coin (USDC), which brands itself as the most compliant stablecoin, for its slow response in freezing illicit funds. Three of the four issuers acted faster, though some commentators suggest that Circle may have been waiting for a court order.

In April, ZachXBT published research on more than 25 hacks targeting companies and individuals in the crypto industry between August 2020 and October 2023. He traced the stolen funds to accounts on peer-to-peer marketplaces where the Lazarus Group allegedly exchanged the crypto for fiat currency.

The investigator noted that Lazarus hackers have historically used Chinese over-the-counter traders to convert crypto assets to fiat money. According to the research, North Korea has laundered more than $200 million from the hacks.

Experts from the Ethereum wallet provider MetaMask, Binance, TRM Labs, and Five I’s contributed to the research.

In a November 2023 report, cybersecurity firm Recorded Future estimated that the Lazarus Group is responsible for $3 billion in losses incurred by crypto companies and investors over the past six years.

Meanwhile, stablecoin issuers are well-known for their ability to freeze funds linked to illicit activity. One of the largest freezes occurred in November 2023 when Tether froze $225 million in tether (USDT) following an investigation by the US Department of Justice. The funds were reportedly linked to an international human trafficking syndicate in Southeast Asia, responsible for a global "pig butchering" romance scam.