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North Korea Is Developing Own Crypto to Circumvent US Sanctions

Nicholas Otieno   Sep 29, 2019 23:11 3 Min Read


   

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North Korea has always been suspected for either indirectly or directly funding weapons or involve in some powerful projects of mass destruction using virtual currencies. The nation was recently accused of stealing cryptocurrencies worth $2 billion to facilitate the development of deadly weapons. 

 

Japanese and South Korean exchanges were mainly targeted for the theft, and hackers utilized phishing to hack into user accounts. 

 

Furthermore, the secretive nation has repeatedly turned to virtual currencies to raise cash through illegal means. The list seems endless. 

 

However, the Korea Central News Agency (KCNA) - a Kim Jong-un’s official state media - denied all allegations of such massive theft. 

 

Development phase 

North Korea says that it is in the early stages of establishing its own cryptocurrencies as a way of bypassing US sanctions and outmaneuvering the US-dominated global economic system. The proposed virtual currency hasn’t been given a name, but probably it will be “more like bitcoin or other digital currencies” mentioned Alejandro Cao de Benos, a special representative of North Korea’s foreign ministry. He also said: 

“We are still in the early stage in the development of the token. We are now in the phase of studying the goods which will give value to it.” 

But, the North Korean Embassy in New York neither denied nor confirmed de Benos’ claim. The embassy’s spokesperson only stated they are “not able to give an answer” and eventually hung up.  

 

In pursuit of the dream 

Blockchain.News learned that North Korea organized an initial cryptocurrency and blockchain conference event in April, with de Benos revealing that the nation now feels prepared to dip its hands into the waters of the crypto market with an offering of its own.   

 

Close watchers of the country’s use of cryptocurrencies already have reported that the regime has huge expertise to deploy and develop its digital currency and blockchain which would assist the North Koreans in avoiding sanctions. The nation, over the few past years, has shown extensive interest in virtual currencies, along with areas of cryptojacking, hacking exchanges, mining, and many more. 

 

The complexity of the project 

While cryptocurrency provides some anonymity, it has become easier for governments and law enforcement to track virtual currency payments across the globe. By developing its own digital currency, Kim Jon Un would be able to have access to it and control how it functions – the same way nations like Iran, Venezuela, and Russia have explored similar projects. 

 

However, while experts believe Kim Jong-un has the capacity to build its own cryptocurrencies, they are far from convinced that the project will be remotely successful. Perhaps it could just turn out to be like another Venezuela’s failed Petro coin that experts saw as propaganda exercise instead of a genuine effort to develop a new monetary system. 

 

Venezuela, which is currently facing heavy US sanctions, attempted creating its own state-sponsored cryptocurrencies with terrible results and consequently leading to a US ban by the Trump administration. 

 

Many sanctions on North Korea imply that any cryptocurrency it builds would certainly be illegal to sell or buy in much of the world. 

 

US use of sanctions is reliant on the role of the dollar in the international financial system. Moreover, US sanctions have crucial secondary impacts since non-US banks cannot risk losing access to dollar transactions by conducting business with sanctioned entities or persons.

 

Image via Shutterstock


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