How to Detect North Korean Crypto Transactions on the Blockchain

Between 2017 and 2023, North Korean hackers stole over $3 billion in cryptocurrency. That’s not just a number-it’s the equivalent of funding a nuclear program for years, all through digital theft. The February 2025 hack of Bybit, where $1.5 billion in Ethereum was stolen, wasn’t an anomaly. It was the largest single crypto heist in history-and it was just the latest move in a well-oiled machine. These aren’t lone hackers. They’re state-backed teams with one goal: turn stolen crypto into cash to bypass international sanctions.

How North Korean Hackers Move Stolen Crypto

It doesn’t start with a complex algorithm. It starts with phishing. A single employee clicks a malicious link. A wallet key is stolen. A smart contract is exploited. Then, the real work begins: laundering.

The stolen crypto-usually Ethereum or tokens on Binance Smart Chain-gets moved through a series of wallets. Not just a few. Dozens. Hundreds. Each transfer is designed to break the trail. Within hours, the funds are bridged to Solana, then to Bitcoin. Why Bitcoin? Because it’s the most liquid, the most accepted, and the hardest to trace at scale.

Hackers don’t rely on old-school mixers like Wasabi Wallet or Tornado Cash anymore. Those are watched. Instead, they use a technique called “flood the zone.” They send thousands of tiny transactions across multiple chains, exchanges, and decentralized bridges in under 30 minutes. It’s not about hiding one transaction-it’s about drowning analysts in noise.

In the DMM Bitcoin breach, 4,502.9 Bitcoin-worth $305 million-was stolen. The hackers didn’t just move it once. They shuffled it through 17 different wallets across three blockchains before it hit Huione Guarantee, a Cambodian-based online marketplace linked to a conglomerate known for laundering cybercrime proceeds. This isn’t guesswork. It’s a playbook.

What Tools Are Used to Track These Transactions?

There are only a handful of firms that can keep up. TRM Labs and Chainalysis are the leaders. They don’t just watch one chain. They watch them all-Ethereum, Bitcoin, Solana, Binance Smart Chain, Polygon-and the bridges connecting them.

Chainalysis Reactor is one of the most powerful tools in the game. Analysts use it to map out transaction graphs. They look for clusters: wallets that send and receive from the same pattern of addresses. They spot the same wallet addresses reappearing after every major hack. They find the footprints left behind-even when the hackers think they’ve erased them.

TRM Labs focuses on timing and volume. They’ve noticed that North Korean actors move money faster than anyone else. Their transactions happen in bursts. They use automated scripts to move funds the moment a breach occurs. TRM’s system flags anything that matches the “DPRK signature”: high-frequency transfers, cross-chain swaps within minutes, and movement toward known laundering hubs like Huione or centralized exchanges in Southeast Asia.

Both firms use wallet clustering. If 12 different wallets all send small amounts to the same receiving address, and that address then sends to a known North Korean-linked wallet, the system connects the dots. It’s like recognizing a face in a crowd-even if they’ve changed their hair, their coat, and their shoes.

Why Traditional Monitoring Fails

Most crypto exchanges and DeFi platforms use basic KYC and AML tools. They check if a wallet is on a sanctions list. That’s not enough. North Korean hackers rarely use wallets that are already flagged. They create new ones daily. Thousands of them.

They also avoid centralized exchanges when possible. Instead, they use decentralized bridges and peer-to-peer OTC desks in places like Vietnam, Thailand, and Cambodia. These aren’t regulated. They don’t ask questions. They just move the money-for a fee.

Even when a theft is detected, it’s often too late. By the time a blockchain analyst traces the trail, 80% of the funds have already been converted into Bitcoin and moved into cold storage. Some sit untouched for months, waiting for the right moment to be cashed out through underground networks.

The FBI’s Internet Crime Complaint Center (IC3) has warned companies: if you handle large volumes of crypto, you’re a target. And if you think your security team is good enough, you’re wrong. North Korean hackers have cracked systems built by Fortune 500 cybersecurity teams. They don’t need zero-day exploits. They just need one careless employee.

What Happens After a Hack?

After the Bybit hack, the FBI attributed the attack to North Korea within 72 hours. How? Because they’d seen this pattern before. The same wallet clusters. The same bridge usage. The same timing. The same end destination: Huione Guarantee.

The stolen Ethereum was converted to Bitcoin. Then, the Bitcoin was split into smaller chunks and sent to wallets tied to known DPRK actors. Some of those wallets had been inactive for over a year-until this hack woke them up. That’s the strategy: keep wallets dormant, then reuse them for big operations.

DMM Bitcoin shut down completely after its $305 million loss. They didn’t just lose money-they lost trust. Their customers vanished. Their partners pulled out. In crypto, reputation is everything. And once you’re labeled as vulnerable, you’re done.

The Bigger Picture: Why This Matters

This isn’t just about crypto theft. It’s about global security. North Korea is under crippling sanctions. Its economy is starved. But its nuclear program? Still funded. Every $100 million stolen in crypto is another missile tested, another submarine built.

And the attacks are getting smarter. Recent reports show North Korean teams have been researching cryptocurrency ETFs. That’s not random. They’re scouting the next target: institutional money. Hedge funds. Pension funds. Retirement accounts. If they breach one of those, the scale could be ten times worse than Bybit.

The crypto industry can’t afford to ignore this. Exchanges that don’t invest in advanced blockchain intelligence are sitting ducks. DeFi protocols that don’t monitor cross-chain flows are playing Russian roulette. Even small crypto startups are at risk-because a single hack can wipe them out.

What Can Be Done?

There’s no magic bullet. But there are steps that work:

• Use blockchain intelligence platforms like TRM Labs or Chainalysis. Don’t just rely on basic flagging systems.
• Monitor cross-chain activity. If your users are moving funds from Ethereum to Solana to Bitcoin in under an hour, that’s a red flag.
• Track wallet clusters. If the same addresses appear after multiple breaches, flag them-even if they’re not on sanctions lists.
• Work with law enforcement. The FBI and other agencies share threat intel. But you have to reach out first.
• Train your team. Social engineering is the #1 entry point. Phishing simulations, password policies, and multi-signature wallets aren’t optional.

What’s Next?

The next wave of detection won’t just track transactions-it will predict them. AI models are being trained to spot anomalies before a hack even happens. If a wallet suddenly starts sending small test transactions across five chains, that’s not normal. It’s reconnaissance.

Some firms are already testing these systems. They’re looking at transaction timing, sender-receiver relationships, and even the language used in smart contract comments. It sounds like science fiction. But in 2025, it’s the only way to stay ahead.

North Korea isn’t slowing down. Their hackers are getting better. Their tools are more automated. Their targets are bigger. If the crypto industry doesn’t respond with equal speed and precision, the next $1.5 billion theft won’t be the last. It’ll be the first of many.