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 the crypto trading firm Drift, another major exploit was carried out on Kelp, a restaking protocol connected to LayerZero's cross-chain infrastructure. This attack suggests an evolution in the tactics employed by North Korea-linked hackers, who are no longer just exploiting bugs or using stolen credentials, but are now manipulating the fundamental assumptions built into decentralized systems. The combined impact of these two incidents points 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.' 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 key issue with the system's configuration, which relied on a single verifier to approve cross-chain messages, a decision made for speed and simplicity but one that removes a critical safety layer. In response, LayerZero has recommended using multiple independent verifiers to approve transactions, similar to requiring multiple signatures on a bank transfer. However, some have pushed back against this recommendation, stating that LayerZero's default setup was to have a single verifier. The fallout from the exploit has not been limited to Kelp, as its assets are used across multiple platforms, causing problems to spread. 'These assets are a chain of IOUs,' said David Schwed, COO of blockchain security firm SVRN. 'And the chain is only as strong as the controls on each link.' When one link breaks, others are affected, and 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 the marketing of decentralization and its actual implementation. 'A single verifier is not decentralized,' Schwed said. 'It's a centralized decentralized verifier.' Urbelis added, '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.' This means that even systems that appear decentralized can have weak points, especially in less visible layers like data providers or infrastructure, which are increasingly the focus of attackers. The recent targeting by the Lazarus group, which has begun focusing on cross-chain and restaking infrastructure, highlights this shift. These layers are critical but complex, often sitting underneath more visible applications, and they tend to hold large amounts of value, making them attractive targets. 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.