The Koreas | Security | East Asia

Pyongyang Pays South Korean Citizens in Crypto to Sell Military Secrets

Cryptocurrency is not only a financial asset to steal and launder, but also a lucrative tool to help fund global espionage and recruit foreign agents.

Pyongyang Pays South Korean Citizens in Crypto to Sell Military Secrets
Credit: Depositphotos

Seoul recently arrested two South Korean citizens, a 38-year-old cryptocurrency exchange operator (Lee) and a 29-year-old army captain, on charges of espionage related to selling military secrets to Pyongyang. According to reports, a North Korean operative met Lee through an undisclosed online cryptocurrency forum in 2016 and offered him cryptocurrency in exchange for his assistance with ongoing clandestine operations. South Korean media also claims that the two communicated through the private messaging app Telegram. While such features are not inherently bad, criminals have consistently used end-to-end message encryption features and other privacy protocols specific to applications like Telegram to coordinate, propagate, and monetize illicit activity.

The Korean National Policy Agency stated that the North Korean operative paid Lee roughly $600,000 and the army captain about $38,800 in cryptocurrency for their participation. Since Lee has been in contact with the operative since 2016, there are serious concerns over his participation in other incidents of attempted, or successful, espionage against Seoul. Although Pyongyang has a documented history of recruiting South Korean citizens for espionage through coercion and seduction, this is the first known public case of North Korea paying foreign agents in cryptocurrency to commit espionage and an active-duty military captain collaborating with a North Korean hacker. 

Interestingly, one of the operations tasked to Lee involved recruiting the active-duty South Korean military captain. When recruited, the captain provided Pyongyang with log-in credentials necessary to access the Korean Joint Command and Control System (KJCCS), which the South Korean Joint Chiefs of Staff use to assess C4I (command, control, communications, computer, and intelligence) capabilities during military drills, training, and operations. Through Telegram, the North Korean operative also ordered Lee to send spycam equipment to the captain in order to photograph items and information of interest to Pyongyang. The equipment included a wristwatch fitted with a secret camera and USBs loaded with “poison tabs,” a hacking tool that allows one to compromise a computer through its USB port for various purposes, such as stealing information, gaining unauthorized control of the device, and more.

In 2022, North Korea has continued to expand its exploitation of cryptocurrency and financial technologies through social engineering tactics, laundering of stolen virtual assets, and even hacking play-to-earn (P2E) crypto video games as seen in the Axie Infinity hack, totaling over $600 million in stolen assets. In response to these threats, the U.S. government has increased its efforts to counter the proliferation of North Korean cybercrime as seen in its recent designation of, a virtual currency mixer that “indiscriminately facilitates illicit transactions [of Bitcoin] by obfuscating their origin, destination, and counterparties.” According to the U.S. Department of the Treasury, the mixer processed over $20.5 million worth of cryptocurrency laundered in relation to North Korea’s hack of Axie Infinity.

While offering money to foreign nationals in return for government secrets is certainly not new, the case of Lee and the active-duty army captain is extraordinary in that North Korean operatives communicated with them through an encrypted messaging application and decided to issue payments in cryptocurrency, not in traditional currencies.

North Korea paying foreign agents in cryptocurrency indicates that Pyongyang views cryptocurrency not only as a financial asset to steal and launder, but also a lucrative tool to help fund global espionage and recruit foreign agents to advance its national interests.