North Korea's Cryptocurrency Theft Tactics Are Evolving, with DeFi Being Repeatedly Targeted

Less than three weeks after hackers linked to North Korea used social engineering to breach the cryptocurrency trading firm Drift, another major exploit has been carried out against Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure. This attack suggests that North Korea-linked hackers are evolving their methods, moving beyond exploiting bugs or stolen credentials to manipulating the fundamental assumptions built into decentralized systems. The combined incidents of Drift and Kelp point to a more organized campaign, as North Korea escalates its efforts to siphon funds from the cryptocurrency sector. 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 stolen across the Drift and Kelp exploits in just over two weeks. The Kelp breach did not involve breaking encryption or cracking keys; instead, attackers manipulated the data feeding 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 noted. 'Signatures guarantee authorship; they do not guarantee truth.' In simpler terms, the system verified the sender of the message but not the message's accuracy. For security experts, this exploit highlights the manipulation of how the system was set up rather than a novel hacking technique. David Schwed, COO of blockchain security firm SVRN, stated, 'This attack wasn’t about breaking cryptography; it was about exploiting how the system was set up.' A key issue was the configuration choice to rely on a single verifier to approve cross-chain messages, which, although faster and simpler to set up, removes a critical safety layer. Following the incident, LayerZero 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, arguing that 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 from the Kelp exploit has not been contained, as its assets are used across multiple platforms, leading to a wider stress event. Lending platforms like Aave, which accepted the impacted assets as collateral, are now dealing with losses. The incident also exposes a gap between the marketing of decentralization and its actual implementation. 'A single verifier is not decentralized; it’s a centralized decentralized verifier,' Schwed said. Urbelis added, '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 that even seemingly decentralized systems can have weak points, particularly in less visible layers such as data providers or infrastructure, which are increasingly the focus of attackers. The targeting of cross-chain and restaking infrastructure by Lazarus, a group linked to North Korea, underscores this shift. These layers are critical but complex and often hold large amounts of value, making them attractive targets. As attackers 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 but showed how exposed the ecosystem remains to familiar vulnerabilities, especially when security is treated as a recommendation rather than a requirement.