KelpDAO sues LayerZero and co-founder over $292 million rsETH bridge exploit

KelpDAO files suit against LayerZero over April bridge hack

KelpDAO says it has filed a lawsuit against LayerZero and its co-founder over a cross-chain bridge attack that drained about $292 million. A cross-chain bridge is software that moves assets from one blockchain to another, and KelpDAO is a decentralized liquid staking protocol on Ethereum.

KelpDAO announced the filing in a post on X on Thursday. It blames LayerZero's universal bridge protocol for what it describes as the largest exploit of the year so far.

Key points from the filing and the response

• KelpDAO accuses LayerZero of failing to disclose weaknesses and risks in its own technology, and of failing to stop an infiltration of its security infrastructure.
• The April 22 attack drained 116,500 rsETH, worth about $292 million.
• LayerZero co-founder Pellegrino called the claim meritless and said he would defend himself in a British Columbia court.

What KelpDAO alleges in its claim

In its post on X, KelpDAO said: “The exploit was a direct result of LayerZero's failures, including a failure to disclose weaknesses and risks inherent in LayerZero's own technology.”

The protocol also said LayerZero did not prevent an infiltration of its security infrastructure, which KelpDAO says let attackers take advantage of alleged weaknesses in the universal bridge.

KelpDAO added that LayerZero and its co-founder had spent recent months blaming KelpDAO instead of taking responsibility, saying: “Rather than take responsibility, over the last few months, LayerZero and Mr. Pellegrino publicly blamed us for their failures.”

These are allegations made by KelpDAO in its claim. The source material does not show that any court has ruled on them.

LayerZero's co-founder says he will fight the claim in Vancouver

Pellegrino responded on X, saying a notice of civil claim had been filed in British Columbia, Canada, against him and LayerZero. In his words: “Evercrest (KelpDAO) filed a notice of civil claim today in BC (British Columbia, Canada) against myself and LZ (LayerZero). The claim continues to be meritless. I will meet them in Vancouver and defend myself accordingly.”

How the April exploit unfolded

On April 22, a North Korean hacking group allegedly attacked KelpDAO's cross-chain bridge, according to CoinDesk. At the time, KelpDAO held close to one fifth of the circulating supply of the restaked token, and 116,500 rsETH worth roughly $292 million was drained from the bridge.

The effects reached beyond KelpDAO. Aave, the largest lending pool in decentralized finance (DeFi), had to borrow $300 million to meet rising demand from users wanting to withdraw assets. DeFi refers to financial services that run on blockchains instead of through banks.

Days after the attack, $20 billion in total value locked was erased, according to CoinDesk. Total value locked means the combined value of assets deposited in DeFi protocols. The report said experts, including those at JPMorgan, pointed to structural risks that remain in DeFi.

What KelpDAO says it has done since the hack

KelpDAO said it has taken steps to keep user assets safe, including moving rsETH's bridge to a cross-chain security standard it describes as more secure.

It added: “But we also need to correct the record, and hold LayerZero and Mr. Pellegrino accountable for the harm they have caused us and the broader DeFi ecosystem.”

What is still unclear

• The source material does not show the outcome of the case, the amount of money KelpDAO is seeking, or any hearing date.
• The material refers to the co-founder as both Brian Pellegrino and Bryan Pellegrino, so the exact spelling is not settled in the source.
• The claim that a North Korean hacking group carried out the attack is described by the source as alleged, not confirmed.

Why this case draws attention

The loss is described by the source as the largest exploit of 2026 so far, and its aftermath spread into stablecoin markets and wiped $20 billion from DeFi deposits. Stablecoins are crypto tokens designed to hold a steady value, usually tied to the US dollar.

KelpDAO's claim also puts the question of who is responsible for bridge security in front of a court, while LayerZero rejects the allegations.

Sources

• CoinDesk

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