LayerZero Sued Over Multi-Million Dollar DeFi Bridge Exploit

Kelp DAO developer Evercrest Technologies has taken its dispute with LayerZero Labs and CEO Bryan Pellegrino to British Columbia's civil court. In a lawsuit filed on September 24, Kelp alleges that LayerZero reviewed and endorsed the deployment of the rsETH bridge before it was exploited in April, releasing $292 million worth of rsETH.

The attack occurred on April 18, when an attacker accessed the bridge and released 116,500 rsETH. Kelp claims users withdrew more than $650 million after the breach and committed 2,000 ETH to restore the token's backing. The protocol has since migrated the rsETH bridge to Chainlink's Cross-Chain Interoperability Protocol.

LayerZero attributes the breach to a single-DVN setup used by Kelp, which it claims directly contradicts its recommended multi-DVN redundancy model for integrators. It also blames the North Korea-backed Lazarus Group for poisoning RPC infrastructure and forging a cross-chain message.