Evercrest Technologies sues LayerZero over $292M exploit

Evercrest Technologies, the developer behind the liquid restaking protocol Kelp DAO, has filed a lawsuit in the Supreme Court of British Columbia against LayerZero Labs and its CEO, Bryan Pellegrino. The legal action follows a $292 million exploit involving the rsETH bridge that occurred in April.

Evercrest alleges negligent misrepresentation, negligence, and defamation. The claim asserts that LayerZero reviewed and endorsed the bridge configuration in writing, specifically recommending a 1-of-1 verifier setup that Kelp DAO used. Evercrest argues this configuration was the direct cause of the loss, as it allowed a single compromised verifier to confirm forged cross-chain messages.

LayerZero has denied the allegations, maintaining that the exploit was a consequence of Kelp DAO’s decision to use a single-verifier setup, which contradicts LayerZero’s recommended multi-verifier redundancy model. LayerZero attributed the attack to the Lazarus Group, alleging that attackers poisoned RPC infrastructure to manipulate the verifier into confirming the release of 116,500 unbacked rsETH.