North Korea's Crypto Theft Tactics Are Evolving, with DeFi Being a Prime Target

Barely three weeks after hackers linked to North Korea used social engineering to breach the crypto trading firm Drift, it appears that another major exploit has been carried out against Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure. This attack suggests that North Korea-linked hackers are refining their methods, moving beyond exploiting bugs or stolen credentials to manipulating the foundational assumptions of decentralized systems. The combined impact of these incidents points to a more structured effort by North Korea to siphon funds from the crypto sector, rather than isolated hacks. According to Alexander Urbelis, Chief Information Security Officer and General Counsel at ENS Labs, 'This is not a series of incidents; it's a cadence. You cannot patch your way out of a procurement schedule.' More than $500 million was siphoned across the Drift and Kelp exploits in just over two weeks, highlighting the escalating efforts by North Korea to hijack crypto funds. The Kelp breach did not involve encryption breaking or key cracking; instead, attackers manipulated the system's input data, forcing it to rely on compromised information and approve non-existent transactions. 'The security failure is simple: a signed lie is still a lie,' Urbelis noted. 'Signatures guarantee authorship; they do not guarantee truth.' This exploit underscores the system's design flaw, where the focus was on who sent the message rather than the message's accuracy. Security experts view this as exploiting the system's setup rather than a novel hacking technique. 'This attack wasn’t about breaking cryptography,' said David Schwed, COO of blockchain security firm SVRN. '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, removes a critical safety layer. In response, LayerZero has recommended using multiple independent verifiers, akin to requiring multiple signatures on a bank transfer. However, some argue that LayerZero's default setup was to have a single verifier, and the onus should not be on users to configure it differently. 'If you’ve identified a configuration as unsafe, don’t ship it as an option,' Schwed said. The impact has not been limited to Kelp, as its assets are utilized across multiple platforms, leading to a ripple effect. '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, turning a single exploit into a broader stress event. For instance, lending platforms like Aave that accepted the impacted assets as collateral are now dealing with losses. The attack also reveals a discrepancy between the marketing of decentralization and its actual operation. 'A single verifier is not decentralized,' Schwed pointed out. '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, this means that even seemingly decentralized systems 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 begun targeting cross-chain and restaking infrastructure, which are critical but complex and often sit beneath more visible applications, holding large amounts of value and thus becoming attractive targets. If earlier crypto hacks focused on exchanges or obvious code flaws, recent activity suggests a move toward the industry's underlying infrastructure, the systems that connect everything but are harder to monitor and easier to misconfigure. As Lazarus adapts, the biggest risk may not be unknown vulnerabilities but known ones that are not fully addressed. The Kelp exploit did not introduce a new 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 more expensive to ignore.