The North Korean dictator Kim Jong Un could very well be one of the main reasons why bitcoin has been rapidly gaining momentum in the past few months, at least according to some experts in the cryptocurrency market.
For the past few years, North Korea has been placed under several international sanctions in an attempt to limit the regime’s ability to obtain and develop nuclear weapons. Despite this, the government has been known to employ various other side businesses, including drug trafficking and animal export, to fund its military and defense division among other departments. The argument made here is that it is therefore possible that the regime has a significant stake in the cryptocurrency market as well.
Given access to a vast holding of the cryptocurrency, North Korea could, therefore, orchestrate price manipulation entirely to its benefit by simply pumping a particular cryptocurrency to a specific price point and then dumping the entire amount soon after, making enough money to fund its activities.
Bitcoin almost touched $20,000 in December, before stabilizing at just above $13,000 toward the end of 2017. Just a year prior to that, bitcoin traded at around $1,000 for the first time since 2014. The continued price volatility and the increase has attracted several new investors to bitcoin and the remainder of the cryptocurrency market, including those with dubious intent.
Throughout 2017, several South Korean cryptocurrency exchanges, including Bithumb, which is the region’s largest and most popular exchange, have been victims of hacks involving not only user identity theft, but also theft of several millions of dollars worth of digital currency. In December 2017, YouBit announced that it would be declaring bankruptcy following a series of such hacks which caused the exchange to lose one-fifth of its total assets.
Cybersecurity experts believe that North Korea has sufficient precedent and motive to be responsible for these hacks. Digital currency, however, cannot be traced by design, which makes it impossible to know who really was behind the hacks. Nevertheless, if the North Korean government is indeed responsible for the majority of these attacks and wild fluctuations in price, it may turn out to be an alarming sign that the current marked-up valuation of cryptocurrencies is almost purely driven by the regime.
Interestingly, most of the cryptocurrency trading activity comes from Asian markets, resulting in the region playing a significant role in the success of the digital currency ecosystem in 2017. According to TechCrunch, the surge in interest for cryptocurrencies in the area is “fueled by a desire for quick returns and a lack of access to strong investment opportunities.”
The relative anonymity of bitcoin and other cryptocurrencies may have allured the North Korean government to move its financial resources using them. If the regime is indeed responsible for the hacks and price manipulation, its continued involvement and malice in the digital currency market may cause a disruption to the entire ecosystem. While such a revelation may be a severe blow to the valuation most cryptocurrencies, it is essential that the issue be addressed sooner rather than later.