This past weekend, the notorious Lazarus Group–a cybercrime syndicate linked to North Korea–transferred $63.4 million worth of Ethereum from the Harmony bridge hack of 2022 over to various exchanges such as Binance, Huobi and OKX. This has led many to question whether this large transfer of funds might impact Ethereum’s price.
According to on-chain investigator ZachXBT, the group used the privacy and anonymity system Railgun to obscure the nature of their transactions before depositing the funds on the exchanges.
1/2 North Korea’s Lazarus Group had a very busy weekend moving $63.5m (~41000 ETH) from the Harmony bridge hack through Railgun before consolidating funds and depositing on three different exchanges. pic.twitter.com/huDumaJeSh
— ZachXBT (@zachxbt) January 15, 2023
The Harmony hack, which took place in June 2022, saw hackers make off with $100 million after compromising the project’s token bridge. Blockchain analytics company Elliptic and others have attributed the attack to the Lazarus Group. It is unknown yet whether Ethereum’s price will be affected by the fallout from the hack and the subsequent transfer of tokens, however.
This is not the first time the group has been implicated in such cybercrimes, with previous attacks including the March 2022 attack on the Ronin Network, which was estimated to be worth around $622 million, as well as a scheme that impersonated venture capital companies to spread malware to various crypto-related firms.
On January 13th, the Lazarus Group made 350,000 separate wallet transfers using the privacy and anonymity system Railgun before consolidating the funds and depositing them on the three different exchanges. Binance CEO Changpeng “CZ” Zhao stated that his team, in collaboration with Huobi, had detected the funds’ movements and subsequently froze and recovered them.
The Binance chief claimed that the total recovery came to 124 Bitcoin, suggesting that the attackers had converted the funds from ETH to BTC. It’s worth noting that while Lazarus Group originally made the illegitimate transfers in the form of ETH, these tokens could have been later swapped for BTC at many points during the mixing and consolidating process.
It’s currently unknown what steps, if any, have been taken by OKX in response to the alleged criminal transfers. CZ explained that Binance’s security teams are to an extent collaborative and talk to other exchanges, but added that “not all” other exchanges are collaborative.
The incident highlights the importance of blockchain analytics and the role of exchanges in detecting and preventing illicit activities on their platforms.
We detected Harmony One hacker fund movement. They previously tried to launder through Binance and we froze his accounts. This time he used Huobi. We assisted Huobi team to freeze his accounts. Together, 124 BTC have been recovered. CeFi helping to keep DeFi #SAFU!
— CZ Binance (@cz_binance) January 16, 2023
The use of privacy-enhancing tools such as Railgun and Tornado Cash, which were used in the Harmony and Ronin Network hacks respectively, may make it harder for investigators to trace the stolen funds, but it is clear that determined efforts from exchanges, regulators and blockchain analytics companies can help to mitigate the impacts of such cybercrimes.
This latest move from the Lazarus Group of transferring Ethereum from the Harmony bridge hack highlights the ongoing threat of cybercrime and the need for stronger security measures to be implemented by exchanges and other players in the crypto ecosystem, according to security experts on Twitter. It also serves as a reminder of the importance of blockchain analytics and the role it plays in detecting and preventing illicit activities on the blockchain.
Will Lazarus Group ETH transfer impact Ethereum’s price?
It is unclear how this transfer of funds will impact the price of Ethereum, but with a relatively small amount involved, it will probably have little impact. The Lazarus Group has been known to be involved in multiple cyber attacks and thefts, and the fact that they have recently moved a sum of Ethereum could potentially be seen as a bearish signal for the cryptocurrency.
However, Binance and Huobi’s detection and seizure of the funds may also be seen as a positive sign for Ethereum’s security and integrity. So far, the market has not reacted to the news in any meaningful way to impact Ethereum’s price, with Ethereum up 3.09% for the day and 18.33% for the week.
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