North Korea's Expanding Crypto Theft Strategy Targets DeFi

Less than three weeks after North Korea-linked hackers used social engineering to target crypto trading firm Drift, hackers associated with the nation appear to have carried out another significant exploit with Kelp. The attack on Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure, suggests an evolution in the tactics of North Korea-linked hackers, who are now not only seeking out bugs or stolen credentials but also exploiting the fundamental assumptions built into decentralized systems. Taken together, the two incidents suggest something more organized than a series of one-off hacks, as North Korea continues to escalate its efforts to hijack funds from the crypto sector. 'This is not a series of incidents; it is a cadence,' said Alexander Urbelis, chief information security officer and general counsel at ENS Labs. '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 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 causing it to 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.' In simpler terms, 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. '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 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 since recommended using multiple independent verifiers to approve transactions, similar to requiring multiple signatures on a bank transfer. Some in the ecosystem have pushed back on that framing, saying 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 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,' he said. 'And the stack is only as strong as its most centralized layer.' In practice, that means 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 zeroing in on 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.