North Korea's Cryptocurrency Theft Strategies Are Evolving, with DeFi Being a Prime Target

Barely three weeks after hackers linked to North Korea used social engineering tactics 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 an evolution in the tactics employed by North Korea-linked hackers, who are no longer just seeking out vulnerabilities or stolen credentials but are now exploiting fundamental assumptions built into decentralized systems. The occurrence of these two incidents collectively points to a more organized effort than isolated hacks, as North Korea continues to intensify its attempts 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 siphoned across 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 thus 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.' In simpler terms, the system checked who sent the message, not whether the message itself was correct. For security experts, this makes the attack less about a novel hack and more about exploiting the system's setup. '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 a configuration choice, with Kelp relying on a single verifier to approve cross-chain messages, a decision made for speed and simplicity but one that removes a critical safety layer. In the aftermath, 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 on this recommendation, stating that LayerZero’s default setup was to have a single verifier. 'If you’ve identified a configuration as unsafe, don’t ship it as an option,' Schwed advised. '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; like many DeFi systems, its assets are used across multiple platforms, meaning issues can spread quickly. '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. In this case, lending platforms like Aave that 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 pointed out. 'It’s a centralized decentralized verifier.' Urbelis views it more broadly, 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 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, often sitting underneath more visible applications, and they tend to hold large amounts of value, 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.