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

Less than three weeks after hackers linked to North Korea used social engineering to breach 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 attack suggests an evolution in the tactics used by North Korea-linked hackers, who are now not only looking for vulnerabilities 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 by North Korea to hijack funds from the cryptocurrency sector, rather than a series of isolated breaches. 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 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.' In essence, the system verified who sent the message but not whether the message itself was correct. This exploit highlights the issue of exploiting how a system is set up rather than discovering a new hack. 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 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 have pushed back on this recommendation, stating that LayerZero’s default setup was to have a single verifier. Schwed argued, '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 impact of the exploit has not been limited to Kelp, as its assets are used across multiple platforms, leading to a wider stress event. Lending platforms like Aave, which accepted the affected assets as collateral, are now dealing with losses. The incident 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 expanded on this, 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, 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 may explain why Lazarus, a group linked to North Korea, has recently targeted cross-chain and restaking infrastructure, the parts of the cryptocurrency sector 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. Unlike earlier waves of cryptocurrency hacks that focused on exchanges or obvious code flaws, recent activity suggests a move towards targeting the 'plumbing' of the industry, 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 vulnerabilities, 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 more expensive to ignore.