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 signifies an evolution in the tactics employed by North Korea-linked hackers, who are now exploiting fundamental assumptions underlying decentralized systems, rather than just seeking out bugs or stolen credentials. The combined incidents suggest a more organized campaign, as North Korea intensifies 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 encryption breaking or key cracking; instead, attackers manipulated the data fed into the system, forcing it to rely on compromised inputs and approve non-existent transactions. 'The security failure is simple: a signed lie is still a lie,' Urbelis said. 'Signatures guarantee authorship; they do not guarantee truth.' The system checked the sender's identity, not the message's accuracy. Security experts view this as an exploitation of the system's setup rather than a novel hack. 'This attack wasn’t about breaking cryptography,' said David Schwed, COO of blockchain security firm SVRN. 'It was about exploiting how the system was set up.' A key issue was the configuration choice of relying on a single verifier to approve cross-chain messages, which, although faster and simpler to set up, removes a critical safety layer. In response, LayerZero has recommended using multiple independent verifiers to approve transactions, akin to requiring multiple signatures on a bank transfer. However, some have pushed back, stating that LayerZero's default setup was to have a single verifier. 'If you’ve identified a configuration as unsafe, don’t ship it as an option,' Schwed said. 'Security that depends on everyone reading the docs and getting it right is not realistic.' The fallout has extended beyond Kelp, affecting lending platforms like Aave that accepted the impacted assets as collateral, thereby turning a single exploit into a broader stress event. '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. The attack also highlights the disparity between the marketing of decentralization and its actual implementation. 'A single verifier is not decentralized,' Schwed said. 'It’s a centralized decentralized verifier.' Urbelis broadened the perspective: '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 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. This shift may explain why Lazarus has recently targeted cross-chain and restaking infrastructure, according to Urbelis. These layers are critical but complex, often underlying more visible applications, and they tend to hold large amounts of value, making them attractive targets. As Lazarus adapts, 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, this gap is becoming both easier to exploit and far more expensive to ignore.