S. Korea should deepen work with U.S., Japan on sanctions against N.K. after Binance theft: expert

By Chang Dong-woo

WASHINGTON, Nov. 5 (Yonhap) -- A U.S. cryptocurrency expert on Thursday called for South Korea to strengthen cooperation with the United States and Japan through unilateral and multilateral sanctions to counter North Korean cryptocurrency theft, including a recent major incident involving Binance.

"South Korea should also deepen joint work with the United States and Japan to put additional pressure on North Korea," said Ari Redbord, global head of policy at U.S. blockchain intelligence firm TRM Labs, in a written response to Yonhap News Agency's inquiry on South Korea's response to last week's major theft at Binance, the world's largest cryptocurrency exchange.

The U.S. Federal Bureau of Investigation said North Korea was responsible for the theft of more than US$6 billion in cryptocurrency from Binance.

Pyongyang, however, rejected the accusation, calling it a "grave political provocation" against the North.

"Pressure means multilateral and unilateral sanctions, diplomatic pressure on North Korea and its Chinese enablers, and action against the Chinese money laundering networks Pyongyang depends on," Redbord said. "In cases like this, speed is everything. The window to freeze and recover stolen funds is hours and days, not months."

TRM Labs is one of the first blockchain intelligence firms to publicly attribute the theft to North Korean hackers.

Redbord said South Korean financial regulators had moved quickly to convene cryptocurrency exchanges to review security following the incident but pointed to shortcomings in the speed and coordination of efforts to block illicit transactions.

His remarks came as South Korea's unification ministry said Thursday (Korean time) that discussions on possible sanctions over the Binance incident had not begun because the government had yet to fully establish the circumstances surrounding the alleged theft.

The foreign ministry, meanwhile, said it was internally reviewing possible additional measures, including unilateral cyber sanctions, but that no decision had been made.

Asked about the effectiveness of additional sanctions, Redbord said such measures could help disrupt North Korean cryptocurrency laundering operations, provided they target the networks responsible for converting stolen digital assets into conventional currency.

"Additional sanctions can help, but only if they go after the laundering infrastructure and not just the hackers," he said. "Sanctions don't stop a hack, but they raise the cost of cashing out."

He called for South Korea to establish standing asset-freezing protocols with major cryptocurrency exchanges and stablecoin issuers and connect its exchanges, financial regulators and law enforcement agencies to international real-time asset recovery efforts.

odissy@yna.co.kr
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