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 crypto trading firm Drift, it appears that hackers associated with the nation have executed another significant exploit, this time on Kelp, a restaking protocol tied to LayerZero's cross-chain infrastructure. This attack suggests an evolution in the tactics of North Korea-linked hackers, who are no longer just seeking out vulnerabilities or stolen credentials but are now exploiting fundamental assumptions built into decentralized systems. The combined incidents of the Drift and Kelp exploits, which together resulted in the theft of over $500 million in just over two weeks, point to a more organized effort by North Korea to hijack funds from the crypto 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.' 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. As Urbelis noted, '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 highlights the issue of exploiting how the system was set up rather than discovering a new hack. 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 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, a measure similar to requiring multiple signatures on a bank transfer. However, some in the ecosystem have pushed back against this recommendation, citing 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 impact of 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. This situation exposes a gap between the marketing of decentralization and its actual operation. 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 even systems that appear decentralized can have weak points, particularly in less visible layers such as data providers or infrastructure, which are increasingly the focus of attackers. The Lazarus group has begun targeting cross-chain and restaking infrastructure, according to Urbelis, 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. If earlier waves of crypto hacks focused on exchanges or obvious code flaws, recent activity suggests a move toward what could be called the industry’s plumbing, the systems that connect everything together but are 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; 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.