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 cryptocurrency trading firm Drift, another major exploit was carried out against Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure. This attack suggests an evolution in the tactics of North Korea-linked hackers, who are now exploiting fundamental assumptions built into decentralized systems, rather than just looking for bugs or stolen credentials. The combined incidents point to a more organized effort by North Korea to hijack 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 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 explained, '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. 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, with Kelp 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, similar to requiring multiple signatures on a bank transfer. However, some argue 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, causing problems to spread. Schwed described these assets as 'a chain of IOUs,' where '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 and 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. As Schwed pointed out, 'A single verifier is not decentralized. It’s a centralized decentralized verifier.' Urbelis took a broader view, 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 even seemingly decentralized systems can have weak points, especially in less visible layers like data providers or infrastructure, which are increasingly the focus of attackers. This shift may explain why the Lazarus group has begun targeting cross-chain and restaking infrastructure, which are critical but complex and often hold large amounts of value, making them attractive targets. If earlier crypto hacks focused on exchanges or obvious code flaws, recent activity suggests a move toward the industry’s underlying infrastructure, which is 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 but showed how exposed the ecosystem remains to familiar ones, especially when security is treated as a recommendation rather than a requirement. As attackers move faster, this gap is becoming both easier to exploit and far more expensive to ignore.