A North Korean agent recruited two people and paid them cryptocurrency in a bid to gain access to a South Korean military system, South Korean police said on Thursday.

The police said they arrested two people on spying charges, both of them South Korean nationals. One of them was identified as a businessman who had been running a cryptocurrency exchange, while the other was an army captain.

Authorities said both individuals knew that they were communicating with a North Korean agent. The whereabouts of the agent remain unknown.

Pyongyang targets South Korea's command network

According to the police, the agent and the 38-year-old businessman first made contact in an online cryptocurrency community six years ago. The North Korean agent approached the 29-year-old army captain separately, authorities say.

The agent seemed to be interested in the Joint Command and Control System, South Korea's confidential military network.

The entrepreneur allegedly bought a wristwatch equipped with a hidden camera and sent it to the captain, but  — despite the military officer's bringing the device to the base — he relied on his smartphone instead, police said. The authorities also believe the businessman was planning to use a USB hacking device, the AP news agency said citing a statement from the Korean National Police Agency.

The businessman is said to have attempted to bribe a different military officer in exchange for secrets, but the officer rejected the proposal.

Over half a million dollars in cryptocurrency

Investigators claim that North Korea used cryptocurrency as a means of payment to the South Koreans, transferring an equivalent of 700 million won (roughly $550,000 or €520,000) to the crypto entrepreneur and giving the army captain another 48 million won.

South Korean authorities said North Korea failed to gain access to the Joint Command and Control system. However, the captain is believed to have passed on login information for the network, as well as some images of its website and military security guidelines.

Both South Korean nationals have been indicted under the country's strict National Security Act.

Edited by: Mark Hallam