North Korea's Cryptocurrency Theft Tactics Are Evolving, with DeFi Being a Prime Target

Less than three weeks after hackers linked to North Korea used social engineering to breach crypto trading firm Drift, another major exploit has been carried out on 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 now exploiting fundamental assumptions built into decentralized systems, rather than just seeking out bugs or stolen credentials. The combined incidents of the Drift and Kelp exploits, which together have seen over $500 million stolen in just over two weeks, point to a more organized effort by North Korea to hijack 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.' The Kelp exploit 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. As Urbelis noted, 'The security failure is simple: a signed lie is still a lie. Signatures guarantee authorship; they do not guarantee truth.' This highlights a critical issue where the system checked who sent the message, not whether the message itself was correct, making this exploit more about how the system was set up rather than a clever new hack. David Schwed, COO of blockchain security firm SVRN, emphasized, 'This attack wasn’t about breaking cryptography; it was about exploiting how the system was set up.' A key problem 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. LayerZero has since recommended using multiple independent verifiers to approve transactions, akin to requiring multiple signatures on a bank transfer. However, some have pushed back on this framing, stating that LayerZero’s default setup was to have 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 impact of the exploit has not been limited to Kelp, as its assets are used across multiple platforms, and problems can spread. Schwed explained, 'These assets are a chain of IOUs, and the chain is only as strong as the controls on each link.' When one link breaks, others are affected, such as lending platforms like Aave that accepted the impacted assets as collateral, now dealing with losses and turning a single exploit into a wider stress event. The attack also reveals a gap between the marketing of decentralization and its actual implementation. Schwed stated, 'A single verifier is not decentralized; it’s a centralized decentralized verifier.' Urbelis put it more broadly, '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 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. This shift may explain why Lazarus, a group linked to North Korea, has begun targeting cross-chain and restaking infrastructure, parts of the crypto sector that move assets between systems or allow them to be reused. 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; it 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 far more expensive to ignore.