North Korea's Cryptocurrency Hacking Strategy Expands, Targeting DeFi

Less than three weeks after North Korea-linked hackers used social engineering to breach the crypto trading firm Drift, hackers linked to the nation appear to have carried out another significant exploit with Kelp, a restaking protocol integrated into LayerZero's cross-chain infrastructure. This suggests an evolution in the tactics of North Korea-linked hackers, who are no longer just exploiting bugs or using stolen credentials but are now manipulating the fundamental assumptions built into decentralized systems. The combined incidents of Drift and Kelp point to a more organized effort by North Korea to hijack funds from the crypto sector, rather than isolated breaches. According to Alexander Urbelis, Chief Information Security Officer and General Counsel at ENS Labs, 'This is not a series of incidents; it is a cadence. You cannot patch your way out of a procurement schedule.' More than $500 million was siphoned across the Drift and Kelp exploits in just over two weeks. The Kelp exploit did not involve breaking encryption or cracking keys; instead, attackers manipulated the data fed into the system, forcing it to rely on compromised inputs and approve transactions that never occurred. 'The security failure is simple: a signed lie is still a lie,' Urbelis said. 'Signatures guarantee authorship; they do not guarantee truth.' This means the system checked who sent the message, not whether the message itself was correct. For security experts, this exploit is less about a new hack and more about exploiting how the system was set up. David Schwed, COO of blockchain security firm SVRN, noted, 'This attack wasn’t about breaking cryptography; it was about exploiting how the system was set up.' A key issue was a configuration choice: Kelp relied on a single verifier to approve cross-chain messages, which is faster and simpler but removes a critical safety layer. In response, LayerZero has recommended using multiple independent verifiers to approve transactions, similar to requiring multiple signatures on a bank transfer. However, some in the ecosystem have pushed back, saying LayerZero’s default setup was to have a single verifier. Schwed emphasized, 'If you’ve identified a configuration as unsafe, don’t ship it as an option. Security that depends on everyone reading the docs and getting it right is not realistic.' The fallout has not been limited to Kelp, as its assets are used across multiple platforms, and problems can spread. 'These assets are a chain of IOUs,' Schwed said. 'And the chain is only as strong as the controls on each link.' When one link breaks, others are affected, turning a single exploit into a wider stress event. Lending platforms like Aave that accepted the impacted assets as collateral are now dealing with losses. The attack also highlights a gap between the marketing of decentralization and its actual implementation. 'A single verifier is not decentralized,' Schwed said. 'It’s a centralized decentralized verifier.' Urbelis put it more broadly: 'Decentralization is not a property a system has. It is a series of choices. And the stack is only as strong as its most centralized layer.' In practice, even systems that appear decentralized can have weak points, especially in less visible layers like data providers or infrastructure. These are increasingly the focus of attackers. The shift may explain why Lazarus, a hacking group, has recently targeted cross-chain and restaking infrastructure, the parts of crypto that move assets between systems or allow them to be reused. These layers are critical but complex and often sit underneath more visible applications, holding large amounts of value and making them attractive targets. If earlier waves of crypto hacks focused on exchanges or obvious code flaws, recent activity suggests a move toward what could be called the industry’s plumbing, the systems that connect everything together but are harder to monitor and easier to misconfigure. As Lazarus continues to adapt, the biggest risk may not be unknown vulnerabilities but known ones that are not fully addressed. The Kelp exploit did not introduce a new kind of weakness; it showed how exposed the ecosystem remains to familiar ones, especially when security is treated as a recommendation rather than a requirement. And as attackers move faster, that gap is becoming both easier to exploit and far more expensive to ignore.