KelpDAO has initiated legal action against LayerZero alongside its co-founder, holding the omnichain bridge framework responsible for this year’s most severe security breach, which resulted in a $292 million loss and sparked a massive decentralized finance bank run, according to a post on X on Thursday.
“The exploit was a direct result of LayerZero’s failures, including a failure to disclose weaknesses and risks inherent in LayerZero’s own technology,” KelpDAO stated.
Operating as a decentralized liquid staking platform on Ethereum, KelpDAO additionally charged LayerZero with neglecting to safeguard its security framework from intrusion, asserting that this vulnerability enabled hackers to exploit the universal bridge’s purported flaws.
“Rather than take responsibility, over the last few months, LayerZero and Mr. Pellegrino publicly blamed us for their failures,” noted KelpDAO.
Pellegrino swiftly replied that he would see them in a Canadian court of law.
“Evercrest (KelpDAO) filed a notice of civil claim today in BC (British Columbia, Canada) against myself and LZ (LayerZero),” remarked Pellegrino. “The claim continues to be meritless. I will meet them in Vancouver and defend myself accordingly.”
An alleged North Korean cybercriminal group targeted KelpDAO’s cross-chain bridge on April 22. At that time, the protocol held nearly 20% of the restaked token’s circulating amount, losing 116,500 rsETH valued at approximately $292 million. Repercussions from the security breach rippled through stablecoin ecosystems, compelling Aave, the foremost DeFi borrowing marketplace, to acquire a $300 million loan to handle mounting customer withdrawal demands. Days afterward, the incident wiped out $20 billion in total value locked (TVL), highlighting persistent structural vulnerabilities within decentralized finance, as noted by analysts including specialists at JPMorgan.
KelpDAO also indicated that following the event, it implemented measures to guarantee client funds remain secure and defended, which involved transitioning the rsETH bridge to a safer cross-chain security infrastructure.
“But we also need to correct the record, and hold LayerZero and Mr. Pellegrino accountable for the harm they have caused us and the broader DeFi ecosystem,” the project added.
Originally published at https://www.coindesk.com/business/2026/09/25/kelpdao-sues-layerzero-for-the-largest-exploit-2026-has-seen-so-far.
