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How can anyone steal something that doesn’t exist? Easily, it, seems and getting easier all the time. You and I may view non-existent money as a bit of a joke, but if we do the joke is on us – and it may cost us dearly. I mean, who cares if someone steals something that doesn’t have a physical reality? We all should, apparently. If some billionaire like Elon Musk is involved in it, you can guess there’s a profit to be had somewhere and in all likelihood, somebody is about to be shaken down until their bones rattle. Their wallets won’t make any noise because they’ll be empty. Take any actual currency you can think of – dollars, francs, euros, roubles, krone – you name it, you can bet someone will pinch some of it if they can, like the Artful Dodger in Charles Dickens’ famous book, Oliver Twist, which is about a young boy surviving life with a gang of professional pickpockets . No, I should have written “pinch A LOT of it”. We’re talking billions here, and the stolen cash isn’t going on luxurious hotels, expensive call-girls and expensive dinners, which, while being execrable would at least lead to someone having fun. No, it’s going to fund North Korea’s nuclear weapons programme, and it’s believed that the main target of any resulting North Korean missiles would be the Pentagon in Washington. In case you think either “they’ll never manage to make a nuke” or even: “they’d be aiming at the United States so it wouldn’t affect us in Europe”, I can only say “you’re wrong”. In case you don’t think such a thing should bother us, I can only recommend that you read Annie Jacobsen’s superb (but terrifying) book “Nuclear War – a Scenario”. It should frighten us in Europe but also in Moscow and Beijing, even though Moscow uses North Korean troops to help in its attempt to take over Ukraine. And North Korea is just about crazy enough to make the nightmare come true. The book describes in detail what would happen, moment by scary moment, from when the launch occurs to the obliteration of America’s capital.

Some things, however, are certain. As Ms. Jacobsen writes in the prologue, a one-megaton thermonuclear weapon would generate a temperature of 27-million degrees Fahrenheit, (that’s some 15-million degrees Celsius) at its heart, which would be four or five times as hot as the centre of the sun. She writes that the resulting terrifyingly bright light would be mainly in “soft” X-rays with a very short wavelength and it would superheat the surrounding air to unimaginable temperatures in a fireball that would expand at tens of millions of kilometres per hour. This would cause concrete to explode, anything made of metal to melt, and it would turn any unfortunate human beings it touches into “combusting carbon”, as she delicately puts it. In the case of the 5-storey Pentagon building, the dust inside would superheat and explode, killing every single one of the 27,000 employees in a single instant. It’s an event we should all strive to avoid, even if any of our North Korean readers happen to disagree.

You may be familiar with the principle of crypto-currencies. I confess that I’m not. I’d heard of bitcoin but until I started writing this article, I had no idea what it is. Basically, it’s a computer-generated medium of exchange that can be “spent” although you’d have a hard time carrying around a pocketful of the stuff. Of course, it greatly simplifies the exchange of very large sums although you wouldn’t be able to fill your wallet with a wad of “notes”, nor use it to tip a taxi driver, assuming you ever feel so generous. According to Investopedia, a cryptocurrency is a digital or virtual currency whose security is ensured through cryptography, making it nearly impossible to counterfeit or spend it twice. It most commonly exists on decentralized networks using what’s called “blockchain technology”—a widely spread ledger which is in turn enforced by a disparate network of computers. So, no coinage is generally involved, although crypto coins certainly exist. For very large sums being transferred into safety deposits or investment schemes, crypto is an almost foolproof means of moving very large sums of money from one place to another. At least, it used to be.

How is crypto fraud perpetrated? The perpetrators seem to find it easy but it looks a bit tricky to me, not being technically-minded. If you think you’d like to have a go at what’s called “cryptocurrency mining”, then Russia provides such facilities, if you like (for a price, of course, and legally). It wouldn’t be my choice, but that’s because I’d rather not trust Vladimir Putin with a bent half-penny. In the mining process, powerful computers are set up to work out the incredibly difficult equations involved. They can then add their results to what’s called the “blockchain” (don’t ask!) and check their validity. As more and more bitcoins enter what might pass for “circulation”, the maths gets increasingly complicated. Now, I may be doing him an injustice, but I don’t really see Musk as a mathematical genius who’s able to work out complicated quadratic equations in his head, although he’s undoubtedly very clever. So, he’s almost certainly relying on real mathematical geniuses to do the hard work for him. I once got a prize for maths back in my schooldays, but I’m baffled by cryptocurrency and the calculations that make it work. Partly, I think, because I see it as an unnecessarily complicated way to give crafty thieves new ways to steal large sums of money.

Cryptocurrencies are now being used to purchase goods and services worldwide, even though they’re hungry in terms of electrical power consumption and therefore probably bad for the planet. According to the University of Cambridge Centre for Alternative Finance studies, Bitcoin alone consumes between 31 and 327 terawatts a tear. Compare that with The UK’s annual electricity consumption of 330 TWh in 2020 and you can see a potential problem developing. Is it all necessary? I do not really know, although I’m sure that wealthy bankers and dealers in futures, equities of various other kinds of securities understand it all. It’s a complicated business with all sorts of unintended potential effects. Look at government borrowing, for instance. It’s all very necessary, but if a government borrows more for some perfectly understandable reason, those lending that money will start to worry about the government in question being able to pay it back, so they may demand a higher interest rate.

It’s beautifully explained by the economist Joseph Stiglitz in his book, Freefall. Actually, he has written a number of books, and I have read them all. On the issue of borrowing, he explains: “The concern is well known to developing countries, because they are caught between a rock and a hard place. If they don’t spend money on a stimulus, their economy weakens and creditors demand higher interest rates. If they do spend money on a stimulus, their indebtedness increases and creditors demand high interest rates.” It’s a “lose-lose” situation, although not for the ultimate lender who can raise interest rates way above what might be considered normal. Oh, by the way: if you feel like investing in cryptocurrencies, Russia specialises in providing the necessary “mining services” (as they’re called) to investors and to “mining firms”. Yes, such things exist, although I don’t really understand what they do. Having been brought up in a coal mining area I doubt if the two activities have very much in common. Bankers would look silly in hard hats. In Russia itself, against the international trend for it falling, inflation is on the rise. Thanks to a variety of stimuli, consumer prices there rose by 9.5% year-on-year in last December, up from 8.9% the month before.

The whole business of crypto-currency is strange. Bitcoin, for instance, is backed by billionaire Elon Musk and a single “coin” of it (yes, they really exist) is worth almost €41,000. Not much use for buying a newspaper, I’d have thought, nor putting into a car parking meter. No-one would have enough change anyway, and if they gave it to you in loose coins, they would ruin your pockets. However, getting your hands on a real bitcoin would be no easy matter. It would take a powerful and dedicated computer to add transactions to the blockchain upon which crypto currency depends and the maths behind it is getting more and more difficult. It makes one wonder: is it really worth it? Who needs a currency that can only be understood by a wealthy few, or perhaps only by their advisors? And by crooks, of course.

Iran is keen to develop its nuclear arsenal, but it needs money and stealing crypto currency is an almost risk-free way to obtain it. What happens is that Iran installs agents to steal the names and online identities of ordinary people, although they must be people with bank accounts and credit cards. This opens the door to wealth the victims don’t necessarily have, but the agents don’t care; fraud is their job and they’re good at it. The lesson here is: check your accounts regularly and notify the authorities of any unusual and unexplained activity on or around your savings or investments. The North Korean agents are very quick and if you don’t keep a careful watch, you may find that your life savings have gone and you’ve run up a big credit card bill for something you never bought. Some of these agents are under orders to “acquire” (steal, in other words) vast amounts every month – at least $10,000 is one figure I saw – which is to go to the North Korean government, not to be spent on a lavish lifestyle, “or suffer the consequences”. The scammers create a fake profile and then seeks out a suitable match on a dating site. Sometimes they then say they need money for a surgical operation, or even claim they’re trading in cryptocurrency, encouraging their victims to invest with them. It’s very hard to identify (and even harder to prosecute) the perpetrators, while recovery of the lost funds is virtually impossible. That money – your money – is helping to pay for an intercontinental ballistic nuclear weapon aimed at the United States and the resulting deaths of 27,000 Pentagon employees. Some countries (Australia is one) are trying to make this sort of scamming harder, and not before time. Last year, a Senate Select Committee into Australia as a technology and financial centre recommended a more comprehensive system of licensing and the Australian government agreed and started to work out how best to make it effective. The best way to avoid being scammed, according to the experts, however, is to make certain you know who you’re dealing with, completing any transaction through a reputable exchange and ensuring that all the steps along the way can be verified. It’s easy for men to be conned by a seemingly pretty Oriental lady who is probably in reality a 70-year-old male soldier. Even that level of care is still no cast-iron guarantee against the kind of fraud and corruption beloved of North Korea, but it should help. And always remember: if something looks or sounds too good to be true it will almost certainly be a con. Don’t get tricked!

Meanwhile, Iran is pushing ahead with its nuclear weapons programme at top speed. By the end of 2024, it was producing 7 kilograms of uranium enriched to 60%, which is very close to weapons-grade every month. Now it’s installing more advanced centrifuges and feeding them with uranium enriched to an even higher level. Rafael Grossi, head of the International Atomic Energy Agency (IAEA) told the Economist magazine that there is no possible civilian use for such stuff in such volumes. Whether or not President Trump can reach some sort of compromise agreement with Pyongyang before everything explodes and the world blows up remains to be seen.

In all, North Korean crooks stole around $2.2 billion (€2.1-billion) from crypto platforms last year, a rise of 21%. It’s said that thefts by North Korean thieves have been getting more and more frequent, with last year’s haul 102% higher than in the previous year. One journalist wrote that the thefts were “booming”. We have to hope that the same description doesn’t also apply to the hardware Pyongyang is buying. Is it all bluster and threat? Or does North Korea really have the intention to bomb and destroy Washington? It would be a pointlessly cruel act, and it would be very unlikely to sway world opinion towards adopting Shia Islam. But it’s a fact that 60% of all the crypto currency thefts reported last year were carried out by North Korean hackers. These thefts tend to be impressively large: in one recent theft, the hackers stole $326-million in Ethereum tokens from a blockchain “bridge”, which is a device that links two blockchains to facilitate the passage of cryptocurrency between them.

The hackers’ methods tend to be similar. In some cases, the rightful owners of the currency are conned into handing it over, while in other cases it’s stolen directly by the thieves. In 2021, the amount stolen in this way totalled some $3.2 billion, which represents a fivefold increase on the previous year’s total.

If you decide you want to obtain cryptocurrency money, you would have to open an account into which you deposit a currency of your choice, and there it is held in what’s called a “custodial wallet”. The private “keys” are held by the currency exchange, which stores the money on the customer’s behalf. Some is held in what are known as “hot” wallets, meaning they hold a limited amount to facilitate relatively small transactions. The rest is retained (on paper) in “cold” wallets, which have no connection to the Internet. It’s a risky business, though, with governments not guaranteeing compensation if the exchange in question goes bust. I suspect that anyone dabbling in cryptocurrencies, however, is familiar with a degree of risk being involved. Some exchanges, like BitMart, have said they will compensate losses resulting from hacks, but it’s not known at the time of writing if they have.

There are various kinds of scams, but in most cases, you’d have to be pretty dim to fall for them, involving claims that the recipient has won a “prize” and requiring account details and other identifying data in order to pay it. It’s safest to assume that anyone offering you cash prizes unexpectedly is trying to pick your pocket. Alternatively, some offer what look like genuine investment opportunities which are not real. In a recent case, the billionaire “mining magnate”, Andrew Forrest, launched criminal proceedings against Meta (previously known as Face book) for permitting scam advertisements using his picture without permission and thus suggesting a link that doesn’t exist. In this world of multi-million dollar business and investment, don’t expect honesty or truth, just disappointment. After all, North Korea needs a lot of money to finance its programme of developing and building weapons of mass destruction. It seems certain that Pyongyang organises the crypto-thefts to fund its development of its weapons, regardless of international law. But, of course, North Korea is internationally isolated as far as the global market is concerned, with international sanctions being applied. That’s why Pyongyang has resorted to organised crime, especially crypto theft, to support its state-sponsored activities. It’s said that the North Korean criminal activities are quite sophisticated.

Even so, the US Department of Justice is now cracking down on the North Korean hackers responsible for the crime. Late last year it indicted 14 North Koreans who had managed to find jobs as remote IT workers at American companies, where they succeeded in generating more than $88-million (€84-million) by stealing proprietary information and extorting from their employers. The Independent newspaper in the UK reported one of the biggest such thefts towards the end of 2024, when hackers based in North Korea targeted the Japanese cryptocurrency exchange, DMM Bitcoin. That resulted in the theft of some 4,502.9 Bitcoin, which was worth around $305-million (€292-million) at the time. It led Bitmart to temporarily suspend all withdrawals and promising to compensate depositors who had lost money. The Independent pointed out that Bitmart was not the first exchange dealing in cryptocurrencies to have been targeted and that it will not be the last, either. Even if compensation is paid in this instance, the North Korean hacks could result in an exchange failing for “commercial reasons”, resulting from the thefts. In those cases there would be no compensation payable.

So how do these well-practised hackers go about their thieving business? They can use what’s called “phishing”, sending unsolicited emails to a victim asking for log-in details which are surprisingly frequently provided. These can be used to steal cryptocurrency. Alternatively, they may offer “prizes” or “rewards” (not genuine, of course) in response yo a deposit being paid. As the old saying goes, “there’s no such thing as a free lunch”; ignore such messages. There are also investment scams, in which the scammer creates what looks like a genuine investment trading platform, although it is in reality anything but! Sometimes these are copies of real business platforms, sometimes they’re simply bogus, often with fake “celebrity endorsements”. In more sophisticated cases, a large number of scammers will email and call their victims in a bid to sound real. In some cases, they’ve been set up in such a way that their “clients” can actually trade on the sites. However, they can never withdraw what they’re supposed to have earned. Furthermore, victims may be left with losses because the supposed site has failed commercially. The Independent warned that consumers can protect themselves by transferring their cryptocurrency from the supposed “exchange” to a so-called “software wallet” – a secure application located on your computer or smartphone or even a hardware wallet that can be disconnected from the computer and from the Internet, thus placing the cryptocurrency directly under your personal control. If you happen to lose your personal “keys”, however, you can wave goodbye to your cryptocurrency altogether. In other words, buy yourself a piggy-bank. It’s safer.

By the way, there are also what are known as “romance scams”, in which the scammer creates a fake profile and matches the victim with somebody on one of those dating websites. The romantic interest often then claims they’re in some sort of financial crisis and in need of funds urgently. I think you’d have to be fairly dim to fall for that one, but people do. Some are even lured into setting up a kind of joint account to which the romantic interest has access, although they may turn out to be not the gorgeous oriental girl you imagined but a bulldozer driver from Nampo or Tanchon, built like Arnold Schwarzenegger on speed. Just try to get your money back!

Various governments are trying to tackle the surge in crypto-crime, with new legislation under consideration to limit the scammers opportunities, but they’re very crafty and also very determined, egged on by Pyongyang’s less-than-honest government, which seems to set targets for the amount each operative should aim to steal every month. The problem is that we humans are a bunch of idiots when crafty crimes are being planned and perpetrated against us, especially if attractive members of the opposite sex are being used (whether or not they exist in reality). It simply behoves all of us (myself included) to be very, very careful. I would try to avoid anything involving cryptocurrencies: they can be a minefield for the unwary and even for seasoned operators. It’s trickery at which the North Koreans excel, it seems. This is a scam that’s not going to end any time soon, so don’t become a victim.

T.Kingsley.Brooks@europe-diplomatic.eu