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

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 against Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure. This suggests an evolution in the tactics employed by North Korea-linked hackers, who are no longer just seeking out bugs or stolen credentials but are instead exploiting 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 intensifies 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 approve 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 verified who sent the message but not whether the message itself was correct. For security experts, this exploit highlights the issue of system setup rather than 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 the configuration choice of relying 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 in the ecosystem have pushed back against this recommendation, arguing 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 has extended beyond Kelp, as its assets are utilized 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. This exploit also reveals a gap between the marketing of decentralization and its actual implementation. 'A single verifier is not decentralized,' Schwed noted. 'It’s a centralized decentralized verifier.' Urbelis expands on this, 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.' This means 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 Lazarus, a group linked to North Korea, of cross-chain and restaking infrastructure, underscores this shift. These layers are critical but complex and often hold large amounts of value, making them attractive targets. 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.