Lazarus hack Russian missile maker as Moscow pleas for shells

An elite group of North Korea (DPRK) hackers secretly breached computer networks at a major Russian missile developer for at least five months last year, according to technical evidence reviewed by Reuters and analysis by security researchers.

Reuters found cyber-espionage teams linked to the North Korean government, which security researchers call ScarCruft and Lazarus, secretly installed stealthy digital backdoors into systems at NPO Mashinostroyeniya, a rocket design bureau based in Reutov, a small town on the outskirts of Moscow.

Reuters could not determine whether any data was taken during the intrusion or what information may have been viewed. In the months following the digital break-in Pyongyang announced several developments in its banned ballistic missile program but it is not clear if this was related to the breach.

Experts say the incident shows how the isolated country will even target its allies, such as Russia, in a bid to acquire critical technologies.

Neither NPO Mashinostroyeniya, Russia's embassy in Washington, nor North Korea's mission to the United Nations in New York responded to a request by Reuters for comment.

News of the hack comes shortly after a trip to Pyongyang last month by Russian defence minister Sergei Shoigu for the 70th anniversary of the Korean War – the first visit by a Russian defence minister to North Korea since the 1991 breakup of the Soviet Union.

The targeted company, commonly known as NPO Mash, has acted as a pioneer developer of hypersonic missiles, satellite technologies and newer generation ballistic armaments, according to missile experts – three areas of keen interest to North Korea since it embarked on its mission to create an Intercontinental Ballistic Missile (ICBM) capable of striking the mainland United States.

According to technical data, the intrusion roughly began in late 2021 and continued until May 2022 when, according to internal communications at the company reviewed by Reuters, IT engineers detected the hackers' activity.

NPO Mash grew to prominence during the Cold War as a premier satellite maker for Russia's space program and as a provider of cruise missiles.

Email hack

The hackers dug into the company's IT environment, giving them the ability to read email traffic, jump between networks, and extract data, according to Tom Hegel, a security researcher with US cybersecurity firm SentinelOne, who initially discovered the compromise.

"These findings provide rare insight into the clandestine cyber operations that traditionally remain concealed from public scrutiny or are simply never caught by such victims," Hegel said.

Hegel's team of security analysts at SentinelOne learned of the hack after discovering that an NPO Mash IT staffer accidentally leaked his company's internal communications while attempting to investigate the North Korean attack by uploading evidence to a private portal used by cybersecurity researchers worldwide.

When contacted by Reuters, that IT staffer declined to comment.

The lapse provided Reuters and SentinelOne with a unique snapshot into a company of critical importance to the Russian state which was sanctioned by the Obama administration following the invasion of Crimea.

Two independent computer security experts, Nicholas Weaver and Matt Tait, reviewed the exposed email content and confirmed its authenticity. The analysts verified the connection by checking the email's cryptographic signatures against a set of keys controlled by NPO Mash.

"I'm highly confident the data's authentic," Weaver told Reuters. "How the information was exposed was an absolutely hilarious screwup".

SentinelOne said they were confident North Korea was behind the hack because the cyberspies re-used previously known malware and malicious infrastructure set up to carry out other intrusions.

“Movie stuff”

In 2019, Russian President Vladimir Putin touted NPO Mash's "Zircon" hypersonic missile as a "promising new product," capable of traveling at around nine times the speed of sound.

The fact North Korean hackers may have obtained information about the Zircon does not mean they would immediately have that same capability, said Markus Schiller, a Europe-based missile expert who has researched foreign aid to North Korea's missile program.

"That's movie stuff," he said. "Getting plans won't help you much in building these things, there is a lot more to it than some drawings."

However, given NPO Mash's position as a top Russian missile designer and producer, the company would be a valuable target, Schiller added.

"There is much to learn from them," he said.

Another area of interest could be in the manufacturing process used by NPO Mash surrounding fuel, experts said. Last month, North Korea test-launched the Hwasong-18, the first of its ICBMs to use solid propellants.

That fuelling method can allow for faster deployment of missiles during war, because it does not require fuelling on a launchpad, making the missiles harder to track and destroy before blast-off.

NPO Mash produces an ICBM dubbed the SS-19 which is fuelled in the factory and sealed shut, a process known as "ampulization" that yields a similar strategic result.

"It's hard to do because rocket propellant, especially the oxidizer, is very corrosive," said Jeffrey Lewis, a missile researcher at the James Martin Center for Nonproliferation Studies.

"North Korea announced that it was doing the same thing in late 2021. If NPO Mash had one useful thing for them, that would be top of my list," he added.

State-backed cyber criminals

North Korea allegedly has around 6,000 hackers who operate in over 150 countries. 10% of North Korea’s GDP comes from cybercrime – specifically, fraud, theft, and ransomware.

In 2019, the UN security council report stated that since 2016, North Korea has been increasingly relying on hacking to generate income for the country's treasury. It is believed that most of the proceeds from these criminal activities are likely allocated to the national defense budget – to fund nuclear and missile testing.

As the government completely controls internet access, North Korea’s cryptocurrency industry is mainly crime-related and backed by the state. As per a report from South Korea's primary intelligence agency, hackers affiliated with the North Korean government have stolen $1.2 billion worth of cryptocurrency.

According to blockchain analysis firm Elliptic, North Korea has stolen a total of $2.3 billion in cryptocurrency from businesses between 2017 and 2022. The best-known North Korean hacker collective is the Lazarus Group. It stands behind many cybercrimes worldwide, including the Harmony blockchain hack, which resulted in $100 million in crypto stolen.

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