LayerZero Attributes $290 Million Kelp Exploit to North Korea's Lazarus, Citing Kelp's Security Setup

LayerZero has attributed the $290 million exploit of Kelp DAO to Kelp's own security configuration, stating that the protocol's single-verifier setup, which LayerZero had warned against, was the primary cause of the vulnerability. The attack, which LayerZero believes with preliminary confidence was conducted by North Korea's Lazarus Group, involved the compromise of two remote procedure call (RPC) nodes that LayerZero's verifier relied on for cross-chain transactions. These nodes were manipulated to report false data to LayerZero's verifier while maintaining accurate reports to other systems. To ensure the attack's success, the perpetrators also launched a distributed denial-of-service (DDoS) attack on uncompromised external RPC nodes, forcing a failover to the compromised nodes. The DDoS, which occurred between 10:20 a.m. and 11:40 a.m. Pacific Time on Saturday, allowed the attackers to release 116,500 rsETH. The attack's success was contingent upon Kelp's 1-of-1 verifier configuration, which LayerZero had recommended against in favor of a multi-verifier setup with redundancy. Such a configuration would have required consensus across multiple independent verifiers to confirm a message, thereby preventing the attack. LayerZero has confirmed that there was no contagion to other applications on the protocol and has since brought its verifier back online, announcing that it will no longer support applications with single-verifier setups. The distinction between a protocol-level bug and a configuration failure is significant, as it implies that the protocol functioned as designed and that Kelp's security choices, rather than LayerZero's code, created the vulnerability. The Lazarus Group, which has been linked to the recent Drift Protocol exploit, has now drained over $575 million from DeFi protocols in 18 days through two distinct attack vectors, highlighting the group's adaptability and the need for DeFi protocols to enhance their defenses.