KelpDAO sues LayerZero over $292M cross-chain exploit

KelpDAO, the Ethereum liquid-staking protocol operating as Evercrest, has filed a civil claim in British Columbia against LayerZero and co-founder Bryan Pellegrino, alleging that undisclosed weaknesses in the bridge protocol enabled the $292 million exploit that drained 116,500 rsETH on April 22. KelpDAO says LayerZero failed to disclose risks and to prevent infiltration of its security infrastructure, and that Pellegrino has publicly blamed the protocol instead of taking responsibility.

Pellegrino called the lawsuit "meritless" and said he will defend himself in Vancouver. The attack — reportedly carried out by a North Korean hacking group — triggered one of DeFi's largest liquidity runs, erasing roughly $20 billion in total value locked and forcing Aave to borrow $300 million to meet withdrawals. KelpDAO says it has since migrated rsETH's bridge to a more secure cross-chain standard.