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, another major exploit was carried out against Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure. This attack suggests an evolution in the tactics employed by North Korea-linked hackers, who are no longer just looking for vulnerabilities or stolen credentials but are exploiting the fundamental assumptions underlying decentralized systems. The combined incidents of the Drift and Kelp exploits, which 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 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.' The Kelp exploit did not involve breaking encryption or cracking keys; instead, the attackers manipulated the data feeding into the system, forcing it to rely on compromised inputs and thereby approving 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 highlights a critical issue where the system checked the sender's identity but not the validity of the message itself. For security experts, this exploit is less about a novel hacking technique and more about taking advantage of how the system was configured. 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 the use of a single verifier to approve cross-chain messages, which, although faster and simpler to set up, removes a crucial 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 have argued that LayerZero's default setup was to have a single verifier. Schwed cautioned, '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 repercussions of the exploit have extended beyond Kelp, affecting lending platforms like Aave that accepted the impacted assets as collateral, thus turning a single exploit into a broader stress event. This situation also reveals a disconnect 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 expanded on this, 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, 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. This shift might explain why Lazarus, a group linked to North Korea, has begun targeting cross-chain and restaking infrastructure, the parts of the cryptocurrency space 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. If earlier 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.