North Korea's Cryptocurrency Theft Tactics Are Evolving, with DeFi Being a Prime Target

Less than three weeks after hackers linked to North Korea used social engineering to breach the crypto trading firm Drift, another major exploit has been carried out against Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure. This suggests an evolution in the tactics of North Korea-linked hackers, who are now exploiting fundamental assumptions built into decentralized systems, rather than just looking for bugs or stolen credentials. The combined incidents point to a more organized effort by North Korea to hijack crypto sector funds. 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 breach did not involve breaking encryption or cracking keys but rather manipulating the data feeding into the system, forcing it to rely on compromised inputs and approve transactions that never occurred. As Urbelis noted, 'The security failure is simple: a signed lie is still a lie. Signatures guarantee authorship; they do not guarantee truth.' This exploit highlights the issue of configuration choices, with Kelp relying on a single verifier to approve cross-chain messages, a setup that is faster and simpler but removes a critical safety layer. In response, LayerZero has recommended using multiple independent verifiers, similar to requiring multiple signatures on a bank transfer. However, some argue that LayerZero's default setup was to have a single verifier, and the problem lies in shipping unsafe configurations as options. The fallout from the exploit has not been limited to Kelp, as its assets are used across multiple platforms, causing problems to spread. David Schwed, COO of blockchain security firm SVRN, noted, 'These assets are a chain of IOUs. 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, such as lending platforms like Aave dealing with losses after accepting impacted assets as collateral. The attack also exposes a gap between the marketing of decentralization and its actual implementation. As Schwed stated, 'A single verifier is not decentralized. It’s a centralized decentralized verifier.' Urbelis further emphasized, '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.' This means even seemingly decentralized systems can have weak points, especially in less visible layers like data providers or infrastructure, which are increasingly the focus of attackers. The targeting of cross-chain and restaking infrastructure by groups like Lazarus reflects this shift, as these layers are critical, complex, and hold large amounts of value, making them attractive targets. The biggest risk may not be unknown vulnerabilities but known ones that are not fully addressed, as the Kelp exploit showed how exposed the ecosystem remains to familiar weaknesses, especially when security is treated as a recommendation rather than a requirement.