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

Barely three weeks after hackers linked to North Korea used social engineering to breach the cryptocurrency trading firm Drift, it appears that another significant exploit has been carried out, this time targeting Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure. This attack suggests that North Korea-linked hackers are refining their tactics, moving beyond merely exploiting bugs or using stolen credentials to manipulate the fundamental assumptions underlying decentralized systems. The combined impact of these two incidents points to a more organized effort by North Korea to siphon 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, highlighting the escalating efforts by North Korea to hijack funds from the crypto sector. The Kelp breach did not involve breaking encryption or cracking keys; instead, attackers manipulated the data input into the system, forcing it to rely on compromised data and approving transactions that did not actually occur. 'The security failure is simple: a signed lie is still a lie,' Urbelis noted. 'Signatures guarantee authorship; they do not guarantee truth.' In essence, the system verified the sender of the message but not the accuracy of the message itself. For security experts, this exploit highlights the vulnerability of the system's setup rather than the discovery of a sophisticated 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 of relying on a single verifier to approve cross-chain messages, which, although faster and simpler to set up, removes a critical safety layer. In response, LayerZero has 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 framing, arguing that LayerZero’s default setup was to have a single verifier. Schwed pointed out, '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 not been contained to Kelp, as its assets are utilized across multiple platforms, leading to a wider impact. '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, leading to lending platforms like Aave, which accepted the impacted assets as collateral, now dealing with losses and turning a single exploit into a broader stress event. The attack also reveals a disparity between the marketing of decentralization and its actual implementation. 'A single verifier is not decentralized,' Schwed stated. '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 that 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 crypto sector 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. 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 demonstrated 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 far more expensive to ignore.