Evercrest Technologies, the company behind KelpDAO, has filed a civil lawsuit against LayerZero entities and co-founder Bryan Pellegrino. The case concerns an April exploit that drained 116,500 rsETH, worth about $292 million at the time. KelpDAO claims LayerZero reviewed and approved the bridge configuration later blamed for the attack, though these claims have not been proven in court.
The company behind KelpDAO is taking its dispute with LayerZero to court, filing a civil claim over the April bridge exploit that cost the restaking protocol roughly $292 million. Evercrest Technologies filed the case in the Supreme Court of British Columbia against LayerZero Labs Ltd., LayerZero Labs Canada Inc., and co-founder Bryan Pellegrino. The allegations include negligence, negligent misrepresentation, and defamation.
The Dispute Centers on a 1-of-1 Security Configuration
The exploit involved 116,500 rsETH moved through a bridge connecting KelpDAO infrastructure with Unichain. At the time of the attack, the assets were worth approximately $292 million. A major point of disagreement since then has been the bridge’s security configuration. KelpDAO alleges LayerZero reviewed and endorsed a setup using a single Decentralized Verifier Network (DVN), rather than warning the project that this configuration created a dangerous single point of failure. The lawsuit further alleges that LayerZero later blamed KelpDAO for using that design. These are allegations from Evercrest’s court filing. LayerZero has not been found liable, and the filing does not establish that its account of events is correct. That distinction is especially important in a dispute where technical responsibility for a bridge failure is itself part of the case.
Bridge Security Is Becoming a Legal Question Too
Cross-chain security failures have typically been treated as technical incidents. A bridge gets exploited, investigators trace the funds, developers patch the vulnerability, and protocols argue over who configured what. The KelpDAO case could push that discussion into a different arena. If infrastructure providers review or recommend security configurations used by third-party applications, courts may eventually have to decide what responsibility comes with that advice. That has implications well beyond KelpDAO and LayerZero. Interoperability systems depend on protocols integrating software and trust assumptions they did not design entirely themselves. When hundreds of millions of dollars move through those systems, disagreements about who understood the risk can quickly become more than engineering disputes. For now, the lawsuit marks the beginning of that process rather than the conclusion. The exploit happened in April. The fight over who bears responsibility for it is only now moving into court.
This article was written by the News Desk and edited by Samuel Rae.
Frequently Asked Questions
FAQs KelpDAO vs LayerZero The 292 Million rsETH Bridge Exploit
1 What happened between KelpDAO and LayerZero
KelpDAO is suing LayerZero claiming that a flaw in LayerZeros bridge technology led to a 292 million exploit involving rsETH
2 What is KelpDAO
KelpDAO is a DeFi protocol best known for its liquid restaking token rsETH which lets people earn rewards on staked Ethereum while still using a tradable token
3 What is LayerZero
LayerZero is a crosschain messaging protocol that helps tokens and data move between different blockchains
4 What is rsETH
rsETH is KelpDAOs restaked ETH token It represents Ethereum that has been restaked through services like EigenLayer to earn extra rewards
5 What does a bridge do in crypto
A bridge moves assets or messages from one blockchain to another Its how a token on Ethereum can also exist on Arbitrum Base or other chains
6 What does exploit mean here
An exploit is when someone abuses a bug or weakness in a system to steal funds or break how its supposed to work Here roughly 292 million in value was affected
7 How did the exploit happen
KelpDAO alleges the attacker took advantage of a vulnerability in LayerZeros bridge setup to mint or move rsETH improperly LayerZero disputes this and says the issue lies elsewhere The exact details are still being argued in the case
8 Why is KelpDAO suing instead of just fixing it
Because 292 million is a huge loss KelpDAO wants LayerZero held responsible for the damages and lawsuits are how companies formally seek compensation
9 What does LayerZero say
LayerZero denies responsibility It argues the flaw was in how KelpDAO configured or used the bridge not in LayerZeros core protocol
10 Who is right
Thats for the courts to decide Both sides have published claims but no final ruling has been made
11 What is rsETH worth now
Its value depends on the market and whether the token is trading at peg After an exploit like this rsETH can trade below its intended value until confidence is restored