North Korea's Cryptocurrency Heist Tactics are Evolving, with DeFi Taking the Hit

Less than three weeks after hackers linked to North Korea used social engineering to target the cryptocurrency trading firm Drift, another significant exploit has been carried out against Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure. This attack signifies an evolution in North Korea-linked hackers' strategies, as they now exploit the fundamental assumptions built into decentralized systems, rather than merely seeking out bugs or stolen credentials. The combined incidents suggest a more organized effort by North Korea to intercept 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 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 approve transactions that never actually occurred. 'The security failure is simple: a signed lie is still a lie,' Urbelis said. 'Signatures guarantee authorship; they do not guarantee truth.' This means the system checked who sent the message, not whether the message itself was correct. For security experts, this exploit is less about a clever new hack and more about exploiting how the system was set up. David Schwed, COO of blockchain security firm SVRN, noted, 'This attack wasn’t about breaking cryptography. It was about exploiting how the system was set up.' A key issue was a configuration choice, as Kelp relied 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, similar to requiring multiple signatures on a bank transfer. However, some in the ecosystem have pushed back on this framing, stating 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 exploit has not been limited to Kelp, as its assets are used across multiple platforms, meaning problems can spread. '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, and in this case, lending platforms like Aave that accepted the impacted assets as collateral are now dealing with losses, turning a single exploit into a wider stress event. The attack also highlights 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 put it more broadly, '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 even systems that appear decentralized can have weak points, especially in less visible layers like data providers or infrastructure, where attackers are increasingly focusing. This shift may explain the recent targeting by the Lazarus group, which 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 and often sit underneath more visible applications, holding large amounts of value and 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; 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.