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

Less than three weeks after North Korea-linked hackers used social engineering to target the cryptocurrency trading firm Drift, hackers associated with the nation seem to have carried out another significant exploit, this time with Kelp. The attack on Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure, suggests an evolution in the tactics employed by North Korea-linked hackers, who are no longer just searching for vulnerabilities or stolen credentials, but are also exploiting the fundamental assumptions underlying decentralized systems. When considered together, the two incidents point to a more organized effort than a series of isolated hacks, as North Korea continues to escalate its attempts 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 exploit 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.' In simpler terms, 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, as Kelp relied 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, similar to requiring multiple signatures on a bank transfer. However, some in the ecosystem have pushed back on this framing, stating 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 has not been limited to Kelp, as its assets are used across multiple platforms, meaning problems can spread. Schwed explained, 'These assets are a chain of IOUs, and the chain is only as strong as the controls on each link.' When one link breaks, others are affected, and in this case, lending platforms like Aave that accepted the impacted assets as collateral are now dealing with losses, turning a single exploit into a wider stress event. The attack also exposes a gap between how decentralization is marketed and how it actually works. As Schwed noted, 'A single verifier is not decentralized; it’s a centralized decentralized verifier.' Urbelis stated more broadly, '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, especially in less visible layers like data providers or infrastructure, which are increasingly where attackers are focusing. This shift may explain the recent targeting by the Lazarus group, which has begun zeroing in on cross-chain and restaking infrastructure, according to Urbelis. These layers are critical but complex, often sitting underneath more visible applications, and they tend to hold large amounts of value, making them attractive targets. If earlier waves of cryptocurrency 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, that gap is becoming both easier to exploit and far more expensive to ignore.