KelpDAO Files $292M Lawsuit Against LayerZero Over rsETH Bridge Exploit

Court Filing Details

Evercrest Technologies, the company behind KelpDAO, initiated a civil claim in the Supreme Court of British Columbia against LayerZero Labs Ltd., LayerZero Labs Canada Inc., and co‑founder Bryan Pellegrino. The complaint was filed after an April bridge exploit that cost the restaking protocol roughly $292 million. The lawsuit lists negligence, negligent misrepresentation and defamation as core allegations.

Exploit Overview

The breach involved the unauthorized movement of 116,500 rsETH through a bridge linking KelpDAO infrastructure with Unichain. At the time of the attack, the assets were valued at approximately $292 million. The incident triggered immediate investigations and a public dispute over responsibility for the security failure.

Security Configuration Dispute

KelpDAO alleges that LayerZero reviewed and endorsed a security setup using a single Decentralized Verifier Network (DVN), creating a 1‑of‑1 configuration that represented a single point of failure. According to the filing, LayerZero later blamed KelpDAO for adopting this design, a claim that remains unproven in court. The contested configuration is central to the negligence and misrepresentation counts.

Legal Implications

The case marks a shift from treating bridge failures as purely technical incidents to addressing them through legal channels. If infrastructure providers are found to have reviewed or recommended security configurations for third‑party applications, courts may begin to assign liability for resulting losses. This precedent could affect the broader interoperability ecosystem, where hundreds of millions of dollars flow through protocols that rely on external trust assumptions.

Source: NewsBTC