KelpDAO sues LayerZero and CEO over $292M rsETH exploit

Evercrest Technologies, the entity behind the liquid staking protocol KelpDAO, has filed a civil lawsuit in the Supreme Court of British Columbia against LayerZero Labs and its co-founder and CEO, Bryan Pellegrino. The legal action follows an April 18 exploit that drained 116,500 rsETH, valued at approximately $292 million at the time, from KelpDAO’s bridge infrastructure.

KelpDAO alleges that LayerZero failed to disclose technical risks and failed to secure the infrastructure used by its verification system. The claim further asserts that LayerZero reviewed and endorsed the specific bridge configuration—a single Decentralized Verifier Network (DVN) setup—which KelpDAO argues created a dangerous single point of failure. The lawsuit includes allegations of negligence, negligent misrepresentation, and defamation.

LayerZero has disputed the claims, describing the lawsuit as “meritless.” The company maintains that the exploit was possible because KelpDAO utilized a 1-of-1 verifier configuration rather than the multiple independent verifiers recommended for best practices. LayerZero’s own investigation traced the incident to a social engineering attack on a developer that allowed attackers to compromise internal nodes and forge cross-chain messages.