Crypto hits ‘mother of all economic crises’ threatens North Korea

As the world faces the “mother of all economic crises,” cryptocurrency boosters have their own wake-up call: it means you too.

It’s quite ironic that a financial universe created to replace the real one is dragged down by the dynamics of the old economy that it planned to ignore.

Bitcoin and other such oddities have fallen on their own, of course, as crypto exchanges descend into scandal and farce. However, as the economist Nouriel Roubini warns against the aforementioned crisis, crypto enthusiasts are also scrambling to hedge as stocks take a nosedive for more conventional reasons.

Yet that brings us to another irony: perhaps the crypto superfan with the most to lose is North Korea’s Kim Jong-un.

The most opaque nuclear power used to stay afloat by counterfeiting $100 bills, hacking pharmaceuticals and blackmailing neighbors for cash, oil and food via missile launches and nuclear threats.

Not so much now that hacking crypto exchanges is not only becoming Pyongyang’s main industry, but also a growing industry. In the first five months of 2022 alone, Kim’s army of hackers made at least $840 million by stealing crypto-assets from exchanges around the world, reports blockchain research firm Chainalysis. That’s over $200 million more than Kim’s hackers would have plundered in all of 2021.

Chances are it’s more than that. One thing we have learned over the past few years is that, crypto scene opacity being what it is, the full extent of these hacking episodes is truly revealed.

Kim, of course, has a huge headache on his hands as the value of the assets on which he bases his economic future – and the very legitimacy of his family dynasty – disappears. Why bother stealing coins, non-fungible tokens, what have you, if the loot loses value and is harder to offload to others?

All of this means that an increasingly cash-poor Kim in 2023 is likely to be more desperate. And at a time when the global economy stumbles into a year as uncertain as the Group of Seven countries have ever seen.

Will the exit from China of “President Xi Jinping”zero covid“disaster for real or just happy conversation? Investors can only hope. Could the Federal Reserve slow its tightening moves? Guess what.

Will the Japanese yen dip to 150 to the dollar or climb back towards 100? Where are Europe’s inflation and debt problems headed? Could Vladimir Putin’s Russia slow down its war against Ukraine or expand it? Could Xi and US President Joe Biden come up with bigger trade policy moves? What could OPEC do about production levels over the next 12 months?

New York University’s Roubini fears the worst. “Dr. Doom,” as he is known, believes the global economy “is headed for an unprecedented confluence of economic, financial and debt crises, following the explosion of deficits, borrowing and debt. indebtedness over the past few decades.

Not the least of these is “the mother of all stagflationary debt crises” as high prices collide with slowing growth. This outcome, Roubini concludes, “can be postponed, not avoided.”

To this infuriating list of imponderables, global markets must add further provocations from nuclear-armed North Korea as it returns to geopolitical blackmail. Neither Biden nor Japanese Prime Minister Fumio Kishida’s party has had to worry much about Kim’s in the past two years.

One big reason: Donald Trump has given Kim more political gifts than North Korean authorities ever thought possible: summits, invaluable photo opportunities and praiseworthy public affection from the former American leader. This allowed Kim to accelerate the development of his nuclear program under Trump’s watch.

Pyongyang also had less reason to shake the development aid cut when the crypto hacking game was so spectacularly lucrative.

Not anymore. The recent Collapse of seems to vindicate Roubini’s longstanding contempt for cryptocurrencies. Late last month, Roubini argued that “Crypto is a corrupt game where the house always and consistently runs the retail suckers” who take the big losses.

This latest scandal is sure to hamper the ability of North Korean hackers to help the Kim family pay their bills, says Troy Stangarone, senior director of the Korea Economic Institute of America.

In an op-ed for online magazine The Diplomat, he writes that FTX’s collapse will complicate North Korea’s hacking program as other exchanges tighten security and regulators rush with new monitoring parameters . As crypto values ​​decline, stealing digital coins and tokens also becomes less profitable.

“All of these changes will likely take time, and open source software vulnerabilities may be a permanent feature of the industry, but the scale of FTX’s collapse will likely bring about the kinds of corporate and regulatory changes that will make the crypto less useful for North Koreasaid Stangarone. “For a regime that has become so reliant on crypto to evade sanctions and steal hard currency, the collapse of FTX couldn’t be more timely.”

So do the epic tantrums that are sure to erupt from Pyongyang as Kim realizes his hacking syndicate is bankrupt. The return of “rocket man” Kim, as Trump called him, is the last thing Asian markets need in the coming year.


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