North Korea, NFTs and a hit video game: inside a $500m cryptocurrency theft

Late last month, hackers made off with what was then worth more than $500m from the systems of cryptocurrency network Ronin, in what is believed to be the second-largest cryptocurrency theft on record.

Ronin was a juicy target for a hacker. The blockchain project supports the wildly popular Axie Infinity video game, which with an estimated 8 million players has drawn comparisons to action-driven collecting games like Pokémon Go.

Axie Infinity is hot and involves substantial sums of money. Players purchase creatures called Axies in the form of NFTs, unique digital assets known as non-fungible tokens. The creatures can breed, battle and even be exchanged for cold, hard cash.

The game has swelled in popularity as players see the potential to earn real money. In 2020, one 22-year-old player from the Philippines reportedly bought two apartments in Manila with his earnings from the game. Last year, another player said he earned more through Axie Infinity and other online games than from his full-time job at Goldman Sachs.

Some experts say the rise in reports of cryptotheft come as cryptocurrency is more widely used and better understood than ever before.

The hackers weasel their way to the money through these second-layer systems by either taking advantage of bugs in the code, or getting hold of the private keys that will let them into the systems, explained Christin. Some hackers even subvert the smart contracts to redirect the funds into their hands.

In the Axie Infinity hack, which targeted the Ronin Bridge, the hacker obtained enough private keys to control the bridge and drain the funds. Since so many users had their assets in the bridge, the payout was massive.

Once crypto assets are stolen it can be a challenge for thieves to cash out, especially if the heist is in the nine-figure range. That means funds are often left in limbo for years, or even indefinitely. During that time, the value of the stolen funds can fluctuate due to the volatile nature of the crypto market.