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

Barely three weeks after hackers linked to North Korea used social engineering to breach the cryptocurrency trading firm Drift, it appears that another significant exploit has been carried out, this time targeting Kelp, a restaking protocol integrated into LayerZero's cross-chain infrastructure. This suggests that North Korea-linked hackers are evolving their methods, moving beyond exploiting bugs or stolen credentials to manipulating the foundational assumptions of decentralized systems. The combined impact of these incidents points to a more coordinated effort by North Korea to intercept funds from the cryptocurrency sector, rather than isolated hacks. According to Alexander Urbelis, Chief Information Security Officer and General Counsel at ENS Labs, 'This is not a series of incidents; it's a cadence. You cannot patch your way out of a procurement schedule.' More than $500 million was siphoned off through 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 fed into the system, forcing it to rely on compromised inputs and thereby approving transactions that never actually occurred. 'The security failure is simple: a signed lie is still a lie,' Urbelis noted. 'Signatures guarantee authorship; they do not guarantee truth.' In essence, the system verified who sent the message, not the accuracy of the message itself. 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, akin to requiring multiple signatures on a bank transfer. However, some in the ecosystem have argued 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 repercussions have not been limited to Kelp, as its assets are utilized across multiple platforms, leading to a wider impact when problems arise. 'These assets are a chain of IOUs,' Schwed explained. 'And the chain is only as strong as the controls on each link.' When one link breaks, others are affected, such as lending platforms like Aave that accepted the impacted assets as collateral, now dealing with losses and turning a single exploit into a broader stress event. The attack also reveals 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 broadened this perspective, stating, '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, this means that even systems appearing decentralized can have weak points, particularly in less visible layers such as data providers or infrastructure, where attackers are increasingly focusing. This shift may explain the recent targeting by the Lazarus group. They have begun focusing on cross-chain and restaking infrastructure, Urbelis said, which are critical but complex and often sit beneath 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, this gap is becoming both easier to exploit and far more expensive to ignore.