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 attack suggests an evolution in the tactics used by North Korea-linked hackers, who are now exploiting the fundamental assumptions built into decentralized systems, rather than just looking for bugs or stolen credentials. The two incidents combined indicate a more organized effort by North Korea to hijack funds from the crypto sector, with over $500 million siphoned off in just over two weeks. 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.' The Kelp exploit 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 actually 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 means the system checked who sent the message, not whether the message itself was correct. The attack highlights the issue of exploiting how the system was set up, particularly a configuration choice that relied on a single verifier to approve cross-chain messages, which is faster and simpler but removes a critical safety layer. In response to the fallout, LayerZero has recommended using multiple independent verifiers to approve transactions, similar to requiring multiple signatures on a bank transfer. However, some have pushed back on this recommendation, stating that LayerZero's default setup was to have a single verifier. David Schwed, COO of blockchain security firm SVRN, 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 impact has not been limited to Kelp, as its assets are used across multiple platforms, causing problems to spread. As Schwed explained, '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, leading to a wider stress event, with lending platforms like Aave that accepted the impacted assets as collateral now dealing with losses. The attack also exposes a gap between the marketing of decentralization and its actual implementation. Urbelis pointed out, '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 systems that appear decentralized can have weak points, especially in less visible layers like data providers or infrastructure, which are increasingly the focus of attackers. The shift in targeting may explain why Lazarus, a group linked to North Korea, has begun focusing on 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, often sitting underneath more visible applications, and tend to hold large amounts of value, making them attractive targets. 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 but showed how exposed the ecosystem remains to familiar ones, especially when security is treated as a recommendation rather than a requirement.