North Korea using cryptocurrency to fund nuclear weapons development, report warns

North Korea is using cryptocurrency to evade sanctions and fund the development of nuclear weapons, according to a new study.

Researchers at the Royal United Services Institute (RUSI) revealed how the exploitation of bitcoin and other cryptocurrencies through cyber crime activities offer a "financial lifeline" to North Korea as it seeks to develop its weapons of mass destruction (WMD) program.

Kayla Izenman, a research analyst who co-authored the paper for the defence and security think tank, said cryptocurrency's borderless nature made it an attractive target for actors aiming to circumvent the traditional financial system.

"Given the large amounts of cryptocurrency we're looking at from these exchange hacks and the possibility of more coming from mining operations, it is reasonable to assume that the money may be directly financing North Korea's WMD program," Ms Izenman told The Independent.

"At the very least, cryptocurrency exploitation is allowing North Korea to transact with the rest of the world in ways that aim to circumvent sanctions designed to curb its proliferation financing."

A separate report by the UN Security Council from March estimated North Korea has amassed upwards of $670m (£516m) worth of bitcoin and other cryptocurrencies in order to support its regime.

Despite recent diplomatic progress with the US, North Korea's leader Kim Jong-un continues to test advanced weapons systems, according to state media in the secretive communist country.

The latest weapons tests come as nuclear talks between Mr Kim and Donald Trump remain deadlocked.

Satellite photos from March also revealed North Korea's apparent intentions to launch missiles or possibly a space rocket from a facility near Pyongyang.

One of the key sticking points of the negotiations between the two leaders is Mr Kim's demand that strict economic sanctions imposed on North Korea are brought to an end.

North Korea has consistently denied accusations that it engages in cyber crime in order to evade the sanctions but has shown a considerable interest in cryptocurrency in recent years.​

This week, the country is hosting its first international conference for blockchain technology and cryptocurrencies in Pyongyang, though foreign media is not allowed to attend.

Citizens of Israel, Japan and South Korea are also not welcome at the event, though a website promoting the event claims more than 100 international experts will be in attendance.

The most recent study advised countries to act urgently to avoid the "systemic risk" posed by North Korea through its exploitation of cryptocurrency.

It concluded: "If carried out with the appropriate urgency... countries in the region can succeed in making themselves less vulnerable to the risks of North Korean cryptocurrency activity."