Sanctions or Stability: South Korea Considers How to Address North Korea's Cryptocurrency Threat

According to recent reports, South Korea is considering a possible revision of its sanctions on North Korea following a high-profile cryptocurrency theft,

, as tensions rise between Pyongyang and Washington over North Korea’s cyber-driven financial operations. This comes as the U.S. Treasury has taken steps to penalize North Korean agents accused of laundering stolen digital currency to support its nuclear ambitions—a move North Korea has sharply criticized as ."

On November 4, the U.S. Treasury Department revealed

targeting eight people and two organizations, including North Korean financial officials and companies, for their involvement in moving over $3 billion in stolen cryptocurrency since 2022. The illicit funds, acquired through ransomware, exchange hacks, and fraudulent IT employment, are believed to have been routed through shell firms and banking systems in China, Russia, and elsewhere to bypass international restrictions. Among those named were Jang Kuk Chol and Ho Jong Son, who oversaw $5.3 million in crypto for the state-run First Credit Bank, as well as the Korea Mangyongdae Computer Technology Company, which reportedly used Chinese brokers to hide transactions, according to an .

Kim Un Chol, North Korea’s vice foreign minister, denounced the sanctions as part of a “hostile” American agenda,

and insisting that such pressure would not change Pyongyang’s strategic direction. North Korea has long dismissed sanctions as ineffective, with Kim Jong Un strengthening ties with Russia—including sending troops and military hardware to Ukraine—while refusing to engage with Washington. Although former U.S. President Donald Trump has indicated willingness to restart negotiations with Kim, North Korea has not responded.

Blockchain intelligence firms estimate that North Korean cybercriminals, notably the Lazarus Group, have stolen close to $3 billion in cryptocurrency over the last three years, with a

from the Bybit exchange in 2025 standing out as one of the largest cases. and joined the U.S. in taking action, citing the group’s significant thefts.

South Korea’s potential reconsideration of sanctions highlights ongoing doubts about the current approach’s effectiveness. While U.S. officials maintain that targeting financial intermediaries disrupts North Korea’s funding, Pyongyang argues these measures worsen tensions in the region. The North has also accused the U.S. of focusing on punitive actions rather than diplomatic solutions, even as Trump’s recent trip to Asia included calls for renewed talks.

The situation is further complicated by North Korea’s growing partnership with Russia, which serves as a counterbalance to U.S. power. Experts believe that Seoul’s measured approach may reflect a desire to address security risks while avoiding further conflict.