Blockchain investigator ZachXBT criticized pseudo-decentralized protocols for taking advantage of exploits linked to North Korea.
The approach of the cryptocurrency sector toward hacks and dubious activities is facing scrutiny, as blockchain expert ZachXBT has called out various pseudo-decentralized platforms for benefiting from exploits associated with North Korea while shirking responsibility.
In a post on Telegram dated March 18, he described the nearly $1.5 billion Bybit hack as “eye-opening,” warning that the ongoing security issues within the industry might only worsen without governmental regulations, which could potentially “harm our entire industry.”
According to ZachXBT, a number of these “decentralized” platforms have derived nearly all of their monthly trading volume and fees from transactions associated with North Korea. Nonetheless, he points out, they “refuse to accept any accountability.”
His remarks appear to reference mixing service eXch and multi-currency protocol THORChain, among others, which profited after North Korean operatives routed stolen Bybit assets through their services in an effort to launder the funds. As previously noted, shortly after the heist, Bybit’s CEO Ben Zhou indicated that over $200 million of the $1.46 billion taken had become untraceable, partially because mixing services declined to intervene against North Korean hackers.
KYC as a Trap
ZachXBT also directed criticism at centralized exchanges, mentioning that some take “multiple hours” to react to illicit transactions moving through their systems, despite laundering “only taking minutes.” The specific exchanges he referred to remain unspecified.
He expressed dissatisfaction with current security protocols, claiming that know-your-transaction systems are “deeply flawed and easily sidestepped,” while know-your-customer rules primarily act as a “honeypot for ordinary users” due to frequent breaches and insider information leaks.
In late February, North Korean hackers targeted Bybit, one of the leading cryptocurrency exchanges, and managed to steal approximately $1.46 billion in a highly sophisticated operation. Reports suggest that this attack was executed by compromising an employee’s computer at Safe, Bybit’s technology provider.