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

Less than three weeks after North Korea-linked hackers used social engineering to breach the crypto trading firm Drift, hackers with ties to the nation appear to have executed another significant exploit, 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, as they are no longer solely focused on identifying bugs or exploiting stolen credentials, but are now manipulating the fundamental assumptions underlying decentralized systems. The combined impact of these two incidents points to a more organized effort than a series of isolated hacks, as North Korea continues to escalate 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 thereby approving transactions that never actually occurred. 'The security failure is simple: a signed lie is still a lie,' Urbelis said. 'Signatures guarantee authorship; they do not guarantee truth.' In simpler terms, the system verified the sender of the message but not the message's accuracy itself. For security experts, this exploit highlights the manipulation of the system's setup rather than the introduction of 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 a configuration choice, with Kelp relying on a single verifier to approve cross-chain messages, a choice made for speed and simplicity but one that 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 in the ecosystem have pushed back against this recommendation, noting that LayerZero’s default setup was to use a single verifier. 'If you’ve identified a configuration as unsafe, don’t ship it as an option,' Schwed said. 'Security that depends on everyone reading the docs and getting it right is not realistic.' The fallout from the Kelp exploit has not been contained, as its assets are used across multiple platforms, leading to a broader impact. 'These assets are a chain of IOUs,' Schwed said. 'And the chain is only as strong as the controls on each link.' When one link breaks, others are affected, with lending platforms like Aave, which accepted the impacted assets as collateral, now dealing with losses, turning a single exploit into a wider stress event. The attack also reveals a disconnect between the marketing of decentralization and its actual implementation. 'A single verifier is not decentralized,' Schwed said. '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 systems that appear decentralized 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 the recent targeting by Lazarus. The group has begun focusing on cross-chain and restaking infrastructure, Urbelis said, which are critical but complex components that move assets between systems or allow them to be reused. These layers are not only harder to monitor but also easier to misconfigure, making them attractive targets. If earlier waves of crypto hacks focused on exchanges or obvious code flaws, recent activity suggests a move toward targeting the industry’s underlying infrastructure, the systems that connect everything together but are harder to secure. 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 but 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.