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 cryptocurrency trading firm Drift, another significant exploit was carried out on Kelp, a restaking protocol integrated into LayerZero's cross-chain infrastructure. This attack suggests an evolution in the tactics employed by North Korea-linked hackers, as they are no longer just exploiting bugs or stolen credentials but are now manipulating the fundamental assumptions built into decentralized systems. The combined incidents of Drift and Kelp point to a more organized effort by North Korea to hijack funds from the cryptocurrency sector, rather than 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 simpler terms, the system checked who sent the message, not whether the message itself was correct. For security experts, this exploit is less about a clever new hack and more about exploiting how the system was set up. David Schwed, COO of blockchain security firm SVRN, stated, 'This attack wasn’t about breaking cryptography. It was about exploiting how the system was set up.' A key issue was a configuration choice, as Kelp relied on a single verifier to approve cross-chain messages, which is faster and simpler to set up but removes a critical safety layer. Following the exploit, LayerZero recommended using multiple independent verifiers to approve transactions, similar to requiring multiple signatures on a bank transfer. However, some in the ecosystem have pushed back on this recommendation, arguing 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 fallout from the Kelp exploit has not been limited to Kelp itself, as its assets are used across multiple platforms, meaning problems can spread quickly. Schwed explained, 'These assets are a chain of IOUs. And the chain is only as strong as the controls on each link.' When one link breaks, others are affected, and in this case, lending platforms like Aave that accepted the impacted assets as collateral are now dealing with losses, turning a single exploit into a wider stress event. The attack also highlights a gap between how decentralization is marketed and how it actually works. 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, this means even systems that appear decentralized can have weak points, especially in less visible layers like 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, according to Urbelis. These layers are critical but complex, often sitting underneath more visible applications, and they tend to hold large amounts of value, making them attractive targets. If earlier waves of cryptocurrency hacks focused on exchanges or obvious code flaws, recent activity suggests a move toward the industry’s underlying infrastructure, 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.