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 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 methods, moving beyond exploiting bugs or stolen credentials to manipulating 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. 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 stolen in the Drift and Kelp exploits over just two weeks. 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 information and approve 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. Security experts view this as exploiting the system's setup rather than a novel hack. 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 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. In response, LayerZero has recommended using multiple independent verifiers to approve transactions, akin to requiring multiple signatures on a bank transfer. However, some have pushed back on this, noting 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 impact 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 impacted assets as collateral, are now dealing with losses. The attack also highlights a gap between the marketing of decentralization and its actual implementation. 'A single verifier is not decentralized,' Schwed said. 'It’s a centralized decentralized verifier.' Urbelis added, '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.' This means that even seemingly decentralized systems can have weak points, especially in less visible layers like data providers or infrastructure, which are increasingly the focus of attackers. The recent targeting by the Lazarus group of cross-chain and restaking infrastructure, which are critical but complex and often hold large amounts of value, may explain this shift. 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 kind of weakness but showed how exposed the ecosystem remains to familiar ones, 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.