The crypto landscape, despite its potential to offer more decentralization and financial freedom, has similarly developed into an ecosystem rife with bad actors. Almost overnight, North Korea became one of the largest state-sponsors of crypto-connected cybercrime. To evade international sanctions and fund their weapons programs, they sometimes resort to stealing funds. With the upcoming G7 summit in Canada, discussions are likely to focus on addressing these escalating threats and protecting the broader crypto market. This article explains what’s at stake, what it means, and how it may affect you.

Understanding the Cyber Threat Landscape

North Korea’s engagement with cybercrime, particularly in the form of crypto heists, has become downright sinister. Lest one think such thievery isn’t lucrative, in 2024 North Korean hackers stole an unbelievable $1.34 billion. According to blockchain analytics firm Chainalysis, they achieved that through 47 different hacks. These are not just opportunistic attacks, but rather sophisticated, well-planned operations aimed at producing revenue for the cut-off regime.

The Role of Cryptocurrencies in Cybercrime

Cryptocurrencies provide a compelling suite of benefits for cybercriminals such as those sponsored by the North Korean regime. First, many cryptocurrencies are pseudo-anonymous, making tracking stolen assets cumbersome. This is complicated by the ease of transferring funds across borders one way or another. The decentralized nature of the crypto market makes it impossible to eliminate every single point of failure, as we have already learned. This absence of oversight creates loopholes that can then be exploited through transactions.

North Korean cyber actors have increased their hacking tactics to steal cryptocurrency. They target weaknesses in DeFi protocols and blockchain bridges, use complicated social engineering projects, and penetrate crypto startups under the guise of developers. They’ve even been able to send themselves as insider threats to crypto companies from which Treasury alleges that they’ve stolen crypto, US Treasury has said.

Case Studies of Rogue Nations Involved

North Korea isn’t the only country taking advantage of crypto for illegal activities. Its size and sophistication makes it unique. Iran and Russia are well-known examples of using cryptocurrencies to evade sanctions and fund other illicit activities. These countries often target crypto exchanges, DeFi platforms, and individual investors, employing tactics ranging from phishing attacks to malware deployment.

Among these, the Lazarus Group, a North Korea-backed hacker organization has been especially infamous. In early February 2025, they purportedly masterminded a $1.4 billion hack on the Bybit exchange. This vivid, instant-death style attack became the biggest ever attack against any centralized exchange. These incidents underscore the pressing need for improved cybersecurity practices and global collaboration to address these malign threats.

G7's Initiative for a Global Response

Considering the gravity of the circumstances, it is time for the G7 to act. The upcoming summit in Canada will likely feature discussions on how to counter North Korea's crypto heists and protect the integrity of the international crypto market. The objective is twofold: neutralize the effectiveness of North Korean operations and safeguard the broader crypto ecosystem.

Proposed Strategies for International Cooperation

These could include:

  • Enhanced information sharing: Real-time information sharing between platforms, states, and intelligence agencies is crucial for identifying and responding to cyber threats. The US, Japan, and South Korea have already taken steps in this direction by issuing joint alerts and emphasizing the need for collaborative efforts.
  • Sanctions and asset freezing: Imposing sanctions on individuals and entities involved in crypto-related cybercrime can help disrupt their operations and limit their access to financial resources. Asset freezing measures can also prevent stolen funds from being laundered or used to finance illicit activities.
  • Capacity building: Providing technical assistance and training to countries with less developed cybersecurity infrastructure can help strengthen their ability to detect and respond to cyber threats. This could involve sharing best practices, providing access to advanced security tools, and conducting joint exercises.

Importance of Unified Regulations

The global nature of crypto and the fact that regulations vary broadly — if at all — across jurisdictions present one of the largest hurdles to fighting emerging crypto-related cybercrime. This can greatly enable criminals to take advantage of regulatory arbitrage, shifting their funds and operations to counties with fewer or weaker enforcement mechanisms. 2251, the G7 can lead an important global effort to push for the adoption of similar regulatory standards across the globe. This includes instituting know-your-customer (KYC) and anti-money laundering (AML) requirements.

Unified federal regulations would go a long way to closing loopholes, increasing transparency, and making it harder for cybercriminals to freely act without consequences. This would shield the crypto market from nefarious actors. It would similarly help to establish more trust and confidence among investors.

Challenges Facing the Crypto Ecosystem

Despite their potential advantages, the crypto ecosystem suffers from distinct shortcomings that leave it open to cybercrime. These factors range from technical vulnerabilities, regulatory uncertainty, and lack of user knowledge on security best practices. Tackling these challenges is crucial for unlocking the promise of cryptocurrencies while reducing the dangers associated with them.

Common Misconceptions About Blockchain Security

Another misconception is that blockchain technology is secure by design. Though blockchain provides specific security benefits, including immutability and cryptographic shielding, it isn’t impervious to attacks. These can appear in smart contracts, wallets, and exchanges where they can be taken advantage of by advanced malicious actors.

Perhaps smart contract bugs are an obvious example, but it’s what has caused countless DeFi exploits to result in the loss of millions of dollars. Likewise, poor wallet security practices may leak private keys, keeping attackers with the opportunity to take funds. First and foremost, it’s important to understand that blockchain security is only as secure as its weakest link.

Risks Associated with Token Management

Token management is another area of concern. It’s often because users don’t secure their private keys safely or aren’t careful enough to protect their wallets. This leaves them particularly vulnerable to phishing, malware infections and other cybercriminal activities.

Additionally, the creation of spam or harmful tokens is a severe danger. These tokens usually have complex schemes to fool users into transferring money to scam addresses. Equally insidious, they hope to steal your private keys. As always, be extremely careful when dealing with new or unverified tokens, and do your own research to ensure they’re not a scam before sending any assets.

Key Mistakes to Avoid in Crypto Security

Here are some key pitfalls to watch out for:

Overestimating Blockchain's Security Features

As we discussed above, blockchain is not a magic bullet. Don’t think that your money is just automatically secure because they’re on a blockchain. Get ahead of the game by storing your crypto in wallets, not exchanges, creating strong password phrases and always implementing two-factor authentication.

Misunderstanding the Safety of Private Keys

Your private key is your key to the crypto kingdom.…Publicly disclose that you never shared it with anyone. Store it securely, either in a very safe place, like a hardware wallet or in an encrypted file. Losing your private key is akin to losing the deed to your house. You’ll forfeit access to your funds.

Relying Solely on Two-Factor Authentication

We all love two-factor authentication (2FA), but it doesn’t solve the full problem. Hackers are able to get around 2FA with numerous methods, including SIM swapping or phishing attacks. You may want to take advantage of hardware-based 2FA methods, like a YubiKey, for stronger protection.

Neglecting Token Approval Management

Crypto security is a topic that gets glossed over, but it’s incredibly important for protecting against unauthorized access to your funds. Every time you approve a smart contract to spend your tokens, you are giving that smart contract permission. This is what gives the contract access to your wallet. If the smart contract is malicious or has vulnerabilities, it can drain your funds just like that. Regularly monitor your approvals and revoke any token approvals you don’t use anymore.

Failing to Learn from Previous Security Breaches

Realize that the crypto space is still developing, and with it, the threats to your security are always changing. Avoid future scams, hacks, and other vulnerabilities by staying up-to-date on what all of us have learned the hard way. Follow trusted security practitioners, stay informed with industry news, and engage with online communities to get a step up from the latest and greatest.

The G7’s attention to North Korea’s crypto heists should be viewed as a positive, not a negative, by the crypto community. By addressing these threats and promoting greater security and regulation, the G7 can help create a safer and more trustworthy environment for everyone. As an investor, being aware and making the right moves to protect your wealth is more important now than ever before.