TLDR
- KelpDAO has filed a lawsuit against LayerZero and its CEO Bryan Pellegrino over the April exploit.
- The attack drained 116,500 rsETH, worth about $292 million at the time.
- KelpDAO claims LayerZero failed to disclose known risks and reviewed its bridge setup as secure beforehand.
- Pellegrino called the lawsuit meritless and says he will fight it in a Vancouver court.
- KelpDAO has since moved its rsETH bridge to Chainlink’s Cross-Chain Interoperability Protocol.
KelpDAO has sued cross-chain protocol LayerZero and its co-founder, Bryan Pellegrino, over an exploit that drained hundreds of millions of dollars from its rsETH bridge earlier this year.
🚨BREAKING: KelpDAO sues LayerZero and its CEO over the $292 MILLION rsETH bridge exploit.
KelpDAO alleges undisclosed risks and a 1-of-1 verifier setup enabled North Korea-linked hackers to drain 116,500 rsETH.
The dispute centers on whether LayerZero endorsed the… pic.twitter.com/lKr2HOVllK
— Coin Bureau (@coinbureau) September 25, 2026
The lawsuit was filed this week in British Columbia, Canada. It names both LayerZero and Pellegrino directly.
KelpDAO says the exploit happened because LayerZero did not disclose weaknesses in its own technology. The protocol also claims LayerZero failed to stop attackers from breaking into its infrastructure.
What Happened During The Attack
On April 22, attackers targeted KelpDAO’s cross-chain bridge, which ran on LayerZero’s technology. At the time, the bridge held close to a fifth of the circulating supply of restaked ether.
— Kelp (@KelpDAO) September 25, 2026
The attackers stole 116,500 rsETH tokens. That amount was worth roughly 292 million dollars when the hack took place.
Reports have linked the attack to a North Korean hacking group. Most of the stolen funds were later laundered, according to earlier coverage of the case.
The exploit did not stay contained to KelpDAO. It set off a chain reaction across stablecoin markets.
Aave, the largest lending pool in decentralized finance, had to borrow 300 million dollars. This was needed to cover a wave of users trying to withdraw their assets.
Within days, the exploit wiped out 20 billion dollars in total value locked across DeFi platforms.
The Dispute Over Who Is Responsible
LayerZero published its own incident report after the hack. The company said attackers compromised its internal nodes, tricking its verifier into approving a fake cross-chain message.
LayerZero pointed out that KelpDAO’s bridge relied on a single LayerZero verifier network as its only check. There was no second, independent verifier required to approve transactions.
Because of that single point of approval, the forged message went through and the funds were released. LayerZero said it had already recommended using multiple verifiers and has since stopped acting as the only required verifier for other projects.
KelpDAO disputes this framing. Back in May, the protocol said its verifier setup had already been discussed with LayerZero and was confirmed as secure at the time.
KelpDAO argues LayerZero did not properly warn it about the risks involved in that configuration.
In its new lawsuit, KelpDAO states plainly that the exploit “was a direct result of LayerZero’s failures.” It also accuses LayerZero of reviewing and endorsing its bridge setup in writing before the attack took place.
Pellegrino responded quickly on social media. He confirmed the civil claim was filed in British Columbia against both himself and LayerZero.
He called the claim meritless and said he plans to defend himself in a Vancouver courtroom.
Cointelegraph reached out to LayerZero for comment but had not received a response at the time of publication.
Since the attack, KelpDAO says it has taken steps to better protect user funds. The protocol has moved its rsETH bridge over to Chainlink’s Cross-Chain Interoperability Protocol.
KelpDAO says correcting the public record is part of why it filed the suit, alongside holding LayerZero and Pellegrino accountable for the losses. The case is now headed to a Canadian court, where both sides will argue over what caused one of this year’s largest DeFi losses.
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