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

Less than three weeks after hackers linked to North Korea used social engineering to attack the cryptocurrency trading firm Drift, another major exploit has been carried out against Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure. This suggests that North Korea-linked hackers are adapting their methods, moving beyond exploiting bugs or stolen credentials to manipulating the fundamental assumptions of decentralized systems. The combined impact of these two incidents points to a more organized effort by North Korea to hijack cryptocurrency funds, escalating its attempts to tap into 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.' 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 but rather manipulating the data fed into the system, forcing it to rely on compromised inputs and approve non-existent transactions. As explained by Urbelis, 'The security failure is simple: a signed lie is still a lie. Signatures guarantee authorship; they do not guarantee truth.' This exploit highlights the issue of a system that checks the sender of a message but not the message's accuracy. For security experts, this is less about a new hacking technique and more about exploiting the system's setup. 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 the configuration choice to rely on a single verifier to approve cross-chain messages, which, although faster and simpler, 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 have argued 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 repercussions have extended beyond Kelp, as its assets are utilized 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 incident also reveals 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, 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 seemingly decentralized systems can have vulnerabilities, particularly in less visible layers such as data providers or infrastructure, which are increasingly the focus of attackers. This shift may explain the recent targeting by Lazarus, a group that has begun focusing on 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 hold large amounts of value, making them attractive targets. The biggest risk may not be unknown vulnerabilities but known ones that are not fully addressed, as shown by the Kelp exploit, which did not introduce a new kind of weakness but demonstrated how exposed the ecosystem remains to familiar ones, especially when security is treated as a recommendation rather than a requirement.