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 has been carried out, this time targeting Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure. This attack suggests an evolution in the tactics employed by North Korea-linked hackers, as they now exploit the fundamental assumptions underlying decentralized systems, rather than merely seeking out bugs or stolen credentials. The combined impact of these two incidents points to a more organized effort by North Korea to hijack funds from the cryptocurrency sector, rather than a series of isolated hacks. 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 feeding into the system, forcing it to rely on compromised inputs and approve transactions that never actually occurred. As Urbelis noted, 'The security failure is simple: a signed lie is still a lie. Signatures guarantee authorship; they do not guarantee truth.' In simpler terms, the system verified the sender of the message but not the message's accuracy. For security experts, this exploit highlights the system's setup 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. 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, arguing 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, leading to a wider stress event. Lending platforms like Aave, which accepted the impacted assets as collateral, are now dealing with losses. The attack also exposes the 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 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 that appear decentralized can have weak points, especially in less visible layers like data providers or infrastructure, which are increasingly the focus of attackers. The recent targeting by the Lazarus group of cross-chain and restaking infrastructure, which are critical but complex and often hold large amounts of value, may explain this shift. These layers are attractive targets due to their complexity and the value they hold, and their compromise can have significant effects on the entire ecosystem. As Lazarus continues to adapt, the biggest risk may not be unknown vulnerabilities but known ones that are not fully addressed. The Kelp exploit demonstrated how exposed the ecosystem remains to familiar weaknesses, 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.