KelpDAO sues LayerZero, CEO over $292M rsETH bridge exploit
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Written by
Simonas Brazionis - Updated 2026-09-25 18:05:34
KelpDAO has initiated legal action against cross-chain protocol LayerZero, alleging that security vulnerabilities in LayerZero's infrastructure contributed to a $292 million exploit of its rsETH bridge earlier this year. KelpDAO sues LayerZero, claiming these vulnerabilities led to the significant financial loss.
The lawsuit, which also names LayerZero co-founder and CEO Bryan Pellegrino, was filed following the April 18 incident where KelpDAO claims LayerZero failed to disclose technological risks and prevent attackers from compromising its systems.
Allegations and Disputes
KelpDAO further claimed that LayerZero had previously reviewed and endorsed its deployment and configuration in writing before the exploit occurred. KelpDAO emphasized its commitment to user asset security and its intention to hold LayerZero and Pellegrino accountable for the damage caused to both KelpDAO and the broader DeFi ecosystem.
Pellegrino dismissed the claims as meritless and indicated his intention to defend the case in Vancouver. This legal action escalates a months-long disagreement regarding the cause of the loss, specifically whether it resulted from a compromise of LayerZero's infrastructure, KelpDAO's bridge configuration, or a combination of both.
Technical Details of the Exploit
The April 18 attack led to the theft of 116,500 rsETH, valued at approximately $292 million at the time, from Kelp's LayerZero-powered bridge. LayerZero's incident report suggested that attackers compromised its internal nodes, causing its verifier to approve a forged cross-chain message.
LayerZero contended that the loss was possible because Kelp's bridge relied on a single LayerZero decentralized verifier network (DVN) as its sole verification path. Without a second independent verifier, the bridge released the rsETH after the LayerZero verifier approved the fraudulent message. LayerZero stated it had recommended using multiple DVNs and subsequently ceased acting as the sole required verifier for applications.
KelpDAO has disputed LayerZero's account of responsibility, asserting in May that its DVN configuration had been discussed with LayerZero and deemed secure. KelpDAO accused LayerZero of failing to adequately warn it about potential risks. Following these events, KelpDAO announced plans to migrate the rsETH bridge to Chainlink's Cross-Chain Interoperability Protocol.
