North Korea's Crypto 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, another significant exploit has been carried out against Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure. This suggests an evolution in the tactics used by North Korea-linked hackers, who are no longer just looking for vulnerabilities or stolen credentials but are now exploiting the fundamental assumptions built into decentralized systems. The combined impact of these two incidents points to a more organized effort by North Korea to hijack funds from the crypto 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 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 who sent the message but not whether the message itself was correct. 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 to rely 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, 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 extended beyond Kelp, as its assets are used across multiple platforms, meaning problems can spread quickly. 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, turning a single exploit into a wider stress event. Lending platforms like Aave, which accepted the impacted assets as collateral, are now dealing with losses. The attack also exposes a 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, saying, '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 seemingly decentralized systems can have weak points, particularly in less visible layers like data providers or infrastructure, which are increasingly the focus of attackers. This shift may explain why Lazarus, a group linked to North Korea, has begun targeting cross-chain and restaking infrastructure, 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. 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. As attackers move faster, this gap is becoming both easier to exploit and far more expensive to ignore.