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

Barely three weeks after North Korea-linked hackers infiltrated the crypto trading firm Drift using social engineering, hackers associated with the nation seem to have executed another significant exploit, this time targeting Kelp. The attack on Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure, implies an evolution in the tactics employed by North Korea-linked hackers. They are no longer just searching for vulnerabilities or stolen credentials but are instead exploiting the fundamental assumptions built into decentralized systems. The combined incidents suggest something more organized than 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 stolen 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 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 a simpler issue - the system checked who sent the message, not whether the message itself was correct. For security experts, this makes the attack less about a clever new hack and more about exploiting how the system was set up. 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 a configuration choice: Kelp relied on a single verifier to approve cross-chain messages, which is faster and simpler to set up but removes a critical safety layer. LayerZero has recommended using multiple independent verifiers to approve transactions, similar to requiring multiple signatures on a bank transfer. The fallout has not stayed limited to Kelp, as its assets are used across multiple platforms, meaning problems can spread. '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. In this case, lending platforms like Aave that accepted the impacted assets as collateral are now dealing with losses, turning a single exploit into a wider stress event. The attack also exposes a gap between how decentralization is marketed and how it actually works. 'A single verifier is not decentralized,' Schwed said. 'It’s a centralized decentralized verifier.' Urbelis puts 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, even systems that appear decentralized can have weak points, especially in less visible layers like data providers or infrastructure. Those are increasingly where attackers are focusing. The group has begun targeting cross-chain and restaking infrastructure, Urbelis said, the parts of crypto that move assets between systems or allow them to be reused. These layers are critical but complex, often sitting underneath more visible applications. They also tend to hold large amounts of value, making them attractive targets. If earlier waves of crypto hacks focused on exchanges or obvious code flaws, recent activity suggests a move toward what could be called the industry’s plumbing, the systems that connect everything together, but are harder to monitor and easier to misconfigure. As Lazarus continues to adapt, 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, that gap is becoming both easier to exploit and far more expensive to ignore.