1. Identification and Blocking of Wallets
2. Criticism Towards Circle for Delay
3. Continued Exploitation of Exchanges by the Lazarus Group

Stablecoin issuers Tether, Circle, Paxos, and Techteryx identified and froze wallets associated with the North Korean hacking group Lazarus. These wallets, containing millions in cryptocurrencies, are suspected of laundering funds from various crypto-thefts.

Identification and Blocking of Wallets

Multiple cybercrime incidents orchestrated by the Lazarus Group are increasing fear and skepticism about cryptocurrencies. According to blockchain analyst ZachXBT, the blacklisted wallets hold around $4.96 million in stablecoins including USDT, USDC, BUSD, and TUSD. Additionally, another $1.65 million of assets linked to these wallets have been frozen by several cryptocurrency exchanges, making the total amount of seized funds equal to $6.98 million. This blacklisting comes after the Lazarus Group reportedly hacked the Indonesian cryptocurrency exchange, Indodax, to the tune of $22 million.

Criticism Towards Circle for Delay

Tether, Paxos, and Techteryx immediately blacklisted the wallets. Circle, the issuer of USDC, has been criticized for its delayed action. ZachXBT stated that Circle was delayed by four months, as compared to other issuers, in freezing wallets associated with the Lazarus Group. This has caused frustration within the crypto community, especially due to the large sums of money being transacted. It is argued that if Circle had acted sooner, then Lazarus Group’s activities on the platform could have been halted. This delay has brought back the debate regarding the efficiency of AML measures in the crypto space and the responsibility of stablecoin issuers in combating illicit activities. However, there is no official statement from Circle about this matter as of now. The current situation has also raised the demand for enhanced regulatory measures and better AML measures within the stablecoin sector. The increasing activity of state-sponsored hackers such as the Lazarus Group is concerning. There is more demand for issuers to act faster and proactively to identify and ban malicious accounts.

Continued Exploitation of Exchanges by the Lazarus Group

The recent $22 million hack forced the Indonesian cryptocurrency exchange, Indodax, to suspend operations while it evaluated the consequences. It is suspected that the Lazarus Group was involved. Even though the exchange has since resumed its operations, the attack demonstrates the group’s capability and reach. Despite the freezing of $6.98 million in stablecoins, experts continue to believe that this is only a small part of the total funds generated through criminal activities. As stablecoins are under the spotlight, the pressure on issuers to act faster to detect and freeze such wallets to stop further laundering transactions has been rising. Adding to the pressure, blockchain detective ZachXBT identified seven addresses with 891.13 Bitcoin worth approximately $61 million, also linked to the Lazarus Group a few months ago. The blockchain community and regulators are searching for ways to stop malicious agents like the Lazarus Group from taking advantage of the decentralized nature of cryptocurrencies to carry out illicit activities. As investigations continue, stablecoin issuers and exchanges will have no choice but to enhance their AML measures and prevent these hacking groups from laundering more funds.

The Lazarus Group continues to exploit cryptocurrency exchanges for its illicit operations, highlighting the importance of swift response from stablecoin issuers. Strengthening AML measures and faster blocking of malicious accounts become priorities to protect the cryptocurrency community.