North Korea's Cryptocurrency Theft Tactics Are Evolving, with DeFi Being Repeatedly Targeted

Barely three weeks after hackers linked to North Korea used social engineering to breach the cryptocurrency trading firm Drift, it appears that another significant exploit has been carried out against Kelp, a restaking protocol integrated into LayerZero's cross-chain infrastructure. This attack suggests an evolution in the tactics employed by North Korea-linked hackers, who are no longer just seeking out vulnerabilities or stolen credentials but are also exploiting fundamental assumptions underlying decentralized systems. The combined impact of these two incidents points to a more organized campaign rather than isolated hacks, as North Korea continues to intensify its efforts to siphon 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's 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 straightforward: a signed lie is still a lie,' Urbelis noted. 'Signatures guarantee authorship; they do not guarantee truth.' In simpler terms, the system verified the sender of the message but not the accuracy of the message itself. For security experts, this exploit highlights the exploitation of how the system was set up rather than the discovery of a clever new hack. David Schwed, COO of blockchain security firm SVRN, pointed out, '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, a choice made for speed and simplicity but one that removes a critical safety layer. Following the exploit, LayerZero 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 against this recommendation, arguing that LayerZero's default setup was to have a single verifier. Schwed emphasized, 'If you've identified a configuration as unsafe, don't ship it as an option. Security that depends on everyone reading the documentation and getting it right is not realistic.' The fallout from the exploit has not been limited to Kelp, as its assets are used across multiple platforms, meaning problems can spread quickly. 'These assets are a chain of IOUs,' Schwed explained. '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 wider stress event. In this case, lending platforms like Aave that accepted the impacted assets as collateral are now dealing with losses. The attack also exposes 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 broadened this point, 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, this means that even systems that appear decentralized can have weak points, especially in less visible layers like data providers or infrastructure. These are the areas where attackers are increasingly focusing their efforts. The recent targeting by the Lazarus group can be explained by this shift. According to Urbelis, the group has begun targeting cross-chain and restaking infrastructure, the parts of the crypto sector that move assets between systems or allow them to be reused. These layers are critical but complex, often sitting beneath more visible applications, and they 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, this gap is becoming both easier to exploit and far more expensive to ignore.