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 attack suggests that North Korea-linked hackers are adapting their methods, moving beyond exploiting bugs or stolen credentials to manipulating the fundamental assumptions underlying decentralized systems. The combined incidents of Drift and Kelp point to a more organized effort by North Korea to hijack cryptocurrency funds, escalating its activities in the 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 off through 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.' This exploit highlights the issue of a system checking who sent a message rather than verifying the message's correctness. For security experts, this is less about a new 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 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, 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 said. 'Security that depends on everyone reading the docs and getting it right is not realistic.' The fallout from the Kelp exploit has extended beyond the platform itself, 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. '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, turning a single exploit into a broader issue. 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 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.' In practice, even seemingly decentralized systems can have weak points, particularly 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, the parts of crypto that move assets between systems or allow them to be reused. These layers are critical but complex and often sit underneath more visible applications, holding large amounts of value and 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; 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, this gap is becoming both easier to exploit and far more expensive to ignore.