North Korea's Cryptocurrency Theft Strategy Expands, Targeting DeFi

Less than three weeks after hackers linked to North Korea used social engineering to breach crypto trading firm Drift, another major exploit occurred with Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure. This suggests an evolution in North Korea-linked hackers' tactics, now exploiting basic assumptions in decentralized systems, not just seeking bugs or stolen credentials. The combined incidents point to a more organized effort by North Korea to hijack crypto sector funds. 'This is not a series of incidents; it is a cadence,' said Alexander Urbelis, chief information security officer and general counsel at ENS Labs. '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 involved manipulating 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.' This exploit was less about breaking cryptography and more about exploiting the system's setup. A key issue was Kelp's reliance on a single verifier to approve cross-chain messages, which, although faster and simpler to set up, removes a critical safety layer. LayerZero has since recommended using multiple independent verifiers to approve transactions, akin to requiring multiple signatures on a bank transfer. However, some argue 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,' said David Schwed, COO of blockchain security firm SVRN. 'Security that depends on everyone reading the docs and getting it right is not realistic.' The fallout extends beyond Kelp, as its assets are used across multiple platforms, causing problems to 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, turning a single exploit into a wider stress event. The attack also highlights the 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 noted, '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.' Even seemingly decentralized systems can have weak points, especially in less visible layers like data providers or infrastructure, which are increasingly targeted by attackers. The Lazarus group has begun focusing on cross-chain and restaking infrastructure, critical but complex layers that move assets between systems or allow them to be reused. These layers are attractive targets due to their large value holdings and are harder to monitor and easier to misconfigure. 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 weakness; it showed how exposed the ecosystem remains to familiar ones, especially when security is treated as a recommendation rather than a requirement.