North Korea's Crypto Theft Tactics Are Expanding, with DeFi Being a Prime Target

Less than three weeks after North Korea-linked hackers breached crypto trading firm Drift using social engineering tactics, hackers affiliated with the nation appear to have executed another major 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, who are no longer just seeking out bugs or stolen credentials but are now exploiting the fundamental assumptions underlying decentralized systems. When considered together, the two incidents suggest a level of organization beyond isolated hacks, as North Korea continues to escalate its efforts to siphon funds from the crypto 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 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. For security experts, this exploit highlights the system's setup rather than a novel hacking technique. David Schwed, COO of blockchain security firm SVRN, noted, '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, a decision 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 have pushed back against this recommendation, stating that LayerZero's default setup included a single verifier. Schwed argued, '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 Kelp exploit has not been limited to Kelp itself, as its assets are used across multiple platforms, allowing problems to 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 said. 'It’s a centralized decentralized verifier.' Urbelis broadened this point, 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. These areas are increasingly the focus of attackers. The shift in targeting may explain why Lazarus, a group linked to North Korea, has begun focusing on cross-chain and restaking infrastructure, which are critical but complex and often less visible. These layers are attractive targets because they hold large amounts of value and are harder to monitor and easier to misconfigure. 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; it showed how exposed the ecosystem remains to familiar vulnerabilities, 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.