KelpDAO Sues LayerZero Over $292M Hack of rsETH Bridge
KelpDAO has filed a lawsuit against LayerZero and its CEO Bryan Pellegrino over a $292 million exploit tied to KelpDAO's rsETH bridge. The lawsuit alleges that LayerZero's failures enabled the hack, including a failure to disclose weaknesses in their own technology.
The incident occurred on April 22, when attackers drained 116,500 rsETH worth around $292 million from KelpDAO's bridge. LayerZero had recommended using multiple decentralized verifier networks (DVNs) for verification, but KelpDAO's bridge only used a single DVN. Pellegrino responded to the lawsuit by calling it 'meritless' and stating that he would defend himself in court.
KelpDAO claims that LayerZero publicly blamed them for their failures, and they needed to hold them accountable for the harm caused to the broader DeFi ecosystem. The lawsuit also mentions that the aftermath of the exploit spread across stablecoin markets, forcing Aave to borrow $300 million to meet increasing user demand for withdrawals.
The dispute raises questions about how responsibility is divided when shared cross-chain infrastructure fails, with potential implications for future DeFi protocols negotiating liability for bridge providers.