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

Barely three weeks after North Korea-affiliated hackers employed social engineering to breach the cryptocurrency trading firm Drift, it appears that hackers linked to the same nation have executed another significant exploit, this time targeting Kelp. The attack on Kelp, a restaking protocol integrated into LayerZero's cross-chain infrastructure, suggests a refinement in the operational tactics of North Korea-linked hackers, shifting from merely identifying vulnerabilities or exploiting stolen credentials to manipulating the fundamental assumptions underlying decentralized systems. The cumulative effect of these two incidents points to a more organized effort than isolated hacking attempts, as North Korea intensifies its endeavors to commandeer funds from the cryptocurrency 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 or cracking keys; instead, attackers manipulated the data feeding into the system, forcing it to rely on compromised inputs and thereby approving transactions that never actually occurred. 'The security failure is simple: a signed lie is still a lie,' Urbelis noted. 'Signatures guarantee authorship; they do not guarantee truth.' This exploit highlights a simpler truth - the system checked the sender's identity, not the veracity of the message itself. For security experts, this is less about a novel hacking technique and more about exploiting the system's setup. David Schwed, COO of blockchain security firm SVRN, observed, 'This attack wasn’t about breaking cryptography; it was about exploiting how the system was set up.' A key issue was a configuration choice, where Kelp relied on a single verifier to approve cross-chain messages, a decision made for speed and simplicity but one that removed 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 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 exploit has not been contained to Kelp, as its assets are utilized across multiple platforms, leading to a ripple effect where problems can spread. '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. Lending platforms like Aave, which accepted the impacted assets as collateral, are now dealing with losses. The attack also reveals a gap between the marketing of decentralization and its actual implementation. 'A single verifier is not decentralized,' Schwed stated. '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, this means that even systems appearing decentralized can have weak points, particularly in less visible layers like data providers or infrastructure, which are increasingly the focus of attackers. This shift may explain the recent targeting by Lazarus. The group has begun focusing on cross-chain and restaking infrastructure, Urbelis said, the parts of crypto that move assets between systems or allow them to be reused. These layers are critical but complex and often sit underneath more visible applications, holding large amounts of value and making them attractive targets. If earlier waves of crypto hacks focused on exchanges or obvious code flaws, recent activity suggests a move toward what could be called the industry’s plumbing - 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, that gap is becoming both easier to exploit and far more expensive to ignore.