Lazarus Group’s QinShihuang Meme Coin: A $26M Laundering Scheme from Bybit Heist

North Korea’s Lazarus Group has once again exploited the crypto world, this time using the QinShihuang meme coin to wash away $26 million of the nearly $1.5 billion they stole from Bybit. On-chain investigator ZachXBT’s detailed tracking of transactions across multiple blockchains exposed the hackers’ cunning, but also highlighted the ongoing security challenges within the crypto ecosystem.

• Lazarus launches QinShihuang meme coin to launder $26M from Bybit.
• ZachXBT tracks funds across Ethereum, Solana, and BSC.
• Debate over blockchain rollbacks reignited by Arthur Hayes.

The Lazarus Group, a notorious North Korean hacking outfit, is no stranger to high-profile crypto thefts. Their latest scheme involved launching the QinShihuang meme coin on the Pump Fun platform, a decentralized application used for creating and trading new cryptocurrency tokens. This move was designed to obscure the trail of their ill-gotten gains from Bybit. ZachXBT meticulously followed the stolen funds as they moved across Ethereum, Solana, and Binance Smart Chain (BSC), revealing how the hackers split and recombined the funds to confuse trackers and mix them with others.

This isn’t the first time Lazarus Group has used Pump Fun for laundering schemes. Their repeated exploitation of decentralized platforms underscores a critical vulnerability: these platforms often lack robust security measures. Helius Labs CEO Mert criticized these platforms, stating,

“Teams who build decentralized apps with no filters or protections are making a huge mistake.”

Decentralized apps, Mert argues, must implement basic security measures like blacklisting known criminal wallets to prevent becoming unwitting accomplices to cybercriminals.

In the midst of this chaos, Arthur Hayes, co-founder of BitMEX, proposed a bold solution: rolling back Ethereum’s blockchain to reverse the Bybit theft. This suggestion reignited a heated debate on the unchangeable nature of blockchain records, echoing the 2016 DAO hack when Ethereum did exactly that. Hayes argued,

“Ethereum abandoned immutability after the 2016 DAO hack… If Ethereum did a rollback before, there shouldn’t be resistance to doing it again now to recover Bybit’s funds.”

However, the Ethereum community swiftly rejected the idea, valuing the principles of immutability and decentralization. They highlighted the technical challenges and philosophical objections to such a move, noting that Ethereum’s current account-based model makes a rollback unfeasible. More on this debate can be found here.

The crypto mixing platform eXch also found itself in the spotlight, criticized for refusing to cooperate with Bybit’s recovery efforts. SlowMist’s analysis revealed that Lazarus Group used eXch to launder stolen Ethereum into harder-to-trace cryptocurrencies like Bitcoin and Monero, further complicating the recovery process. Bybit, for its part, has claimed to secure 80% of the stolen funds through bridge loans, which are temporary loans to cover the shortfall until the funds are recovered, while engaging with on-chain analytics providers to track and demix the implicated addresses. More on Bybit’s recovery efforts can be found here.

This incident not only underscores the ongoing security challenges within the crypto space but also highlights the Lazarus Group’s sophisticated laundering tactics. The refusal of platforms like eXch to cooperate raises questions about the effectiveness of current recovery mechanisms and the need for stronger international cooperation to combat state-sponsored hacking groups. Discussions on the QinShihuang meme coin laundering scheme can be found online.

While incidents like these highlight the vulnerabilities in the crypto space, they also drive the need for innovation and better security measures. The potential of blockchain technology to revolutionize finance remains undeniable, yet the challenges posed by malicious actors are equally significant. The debate over blockchain rollbacks, the need for enhanced security in decentralized apps, and the complexities of tracking laundered funds all point to a crypto world in flux, striving to balance innovation with integrity.

Key Takeaways and Questions

• What is the Lazarus Group, and what did they do with the QinShihuang meme coin?

  The Lazarus Group is a North Korean hacking entity that launched the QinShihuang meme coin on the Pump Fun platform to launder $26 million of the nearly $1.5 billion they stole from the Bybit exchange.

• How did ZachXBT trace the laundering process of the stolen funds?

  ZachXBT traced the stolen funds by following transactions across multiple blockchains, including Ethereum, Solana, and Binance Smart Chain (BSC), and identified key wallet addresses involved in the laundering scheme.

• What are the risks associated with decentralized apps, according to Helius Labs CEO Mert?

  Mert highlighted that decentralized apps without proper security measures, like blacklisting known criminal wallets, are vulnerable to exploitation by malicious actors like the Lazarus Group.

• What did Arthur Hayes suggest regarding the Bybit theft, and what was the community’s response?

  Arthur Hayes suggested rolling back Ethereum’s blockchain to reverse the Bybit theft. The community largely rejected this idea, reigniting debates about the unchangeable nature of blockchain records and the feasibility of rollbacks.

• Why is the eXch platform significant in this context?

  The eXch platform was used by the Lazarus Group for laundering stolen Ethereum into harder-to-trace cryptocurrencies like Bitcoin and Monero, and it refused to cooperate with Bybit’s recovery efforts, highlighting the challenges in tracking and recovering stolen funds.