North Korea's Cryptocurrency Theft Tactics Are Evolving, with DeFi Being a Prime Target

Barely three weeks after North Korea-linked hackers used social engineering to breach crypto trading firm Drift, hackers with ties to the nation seem to have executed another significant exploit, this time targeting Kelp, a restaking protocol integrated into LayerZero's cross-chain infrastructure. This attack suggests an evolution in the tactics of North Korea-linked hackers, who are now not only seeking out bugs or stolen credentials but also exploiting fundamental assumptions built into decentralized systems. The combined impact of these two incidents points to a more organized effort than isolated hacks, as North Korea intensifies its attempts to siphon 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's a cadence. You cannot patch your way out of a procurement schedule.' More than $500 million was siphoned 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. 'The security failure is simple: a signed lie is still a lie,' Urbelis noted. '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 new, clever hack and more about exploiting how the system was set up. David Schwed, COO of blockchain security firm SVRN, emphasized, 'This attack wasn’t about breaking cryptography; it was about exploiting how the system was set up.' A key issue was a configuration choice: Kelp relied on a single verifier to approve cross-chain messages, which is faster and simpler to set up but removes a critical safety layer. LayerZero has since 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 criticized this approach, saying, '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; its assets are used across multiple platforms, meaning problems can spread. '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. 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 highlights a gap between how decentralization is marketed and how it actually works. 'A single verifier is not decentralized,' Schwed said. 'It’s a centralized decentralized verifier.' Urbelis broadened this point, 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, especially in less visible layers like data providers or infrastructure. Those are increasingly where attackers are focusing. This shift may explain the recent targeting by Lazarus. The group has begun focusing on cross-chain and restaking infrastructure, Urbelis said, the parts of crypto that move assets between systems or allow them to be reused. 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 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.