North Korea's Cryptocurrency Theft Tactics Are Evolving, with DeFi Being Frequently Targeted

Less than three weeks after hackers linked to North Korea used social engineering to breach the cryptocurrency trading firm Drift, another significant exploit has been attributed to the nation, this time targeting Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure. This attack signals an evolution in the tactics employed by North Korea-linked hackers, who are now not only seeking vulnerabilities or stolen credentials but also exploiting fundamental assumptions underlying decentralized systems. The combined impact of these incidents suggests a more organized effort than isolated hacks, as North Korea continues to escalate its attempts to siphon 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.' Across the Drift and Kelp exploits, more than $500 million was stolen 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 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 the sender of the message but not the message's accuracy. For security experts, this exploit highlights the issue of system 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 of relying 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 pushed back against this recommendation, noting that LayerZero's default setup was to use a single verifier. Schwed argued, '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 Kelp exploit has not been contained, as its assets are utilized across multiple platforms, leading to a ripple effect. '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, resulting in lending platforms like Aave, which 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 disparity 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 to be decentralized can have weak points, particularly in less visible layers such as data providers or infrastructure, which are increasingly the focus of attackers. This shift may explain the recent targeting by the Lazarus group, which has begun focusing on cross-chain and restaking infrastructure, the parts of the cryptocurrency ecosystem that move assets between systems or allow them to be reused. These layers are critical but complex, often underlying more visible applications, and they tend to hold large amounts of value, 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 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.