On Friday, September 25, 2026, BeInCrypto reported that Kelp DAO filed a lawsuit against cross-chain messaging protocol LayerZero and its co-founder, Bryan Pellegrino, over a $292 million exploit that drained the liquid restaking token rsETH earlier this year.
The lawsuit centers on an April 18 attack in which hackers siphoned roughly 116,500 rsETH tokens through the bridge connecting Kelp’s protocol to LayerZero’s infrastructure. The breach ranks as the largest decentralized finance hack recorded in 2026. LayerZero has since attributed the intrusion to TraderTraitor, a hacking unit linked to North Korea’s Lazarus Group.
According to LayerZero’s account of the incident, attackers seized control of a sufficient number of remote procedure call nodes—servers that transmit blockchain data to applications—to feed fraudulent information into the bridge’s verification system. That manipulation caused the verifier to sign off on an rsETH token burn that had not actually taken place, prompting the corresponding smart contract on Ethereum to release funds it should not have released.
LayerZero has countered that responsibility lies with how Kelp structured its bridge, noting that the setup depended on a single verifier run by LayerZero Labs rather than a system with redundant checks.
The exploit’s fallout extended across decentralized finance broadly. Aave alone saw its total value locked drop by $8.45 billion within 48 hours of the attack, part of a wider decline in TVL across major blockchain networks.
In its filing, Kelp DAO alleges that LayerZero and Pellegrino spent months after the hack publicly shifting blame onto Kelp, despite having reviewed and signed off on the protocol’s configuration beforehand. Kelp has released the complaint publicly and is seeking to hold both parties accountable.
Separately, efforts to recover the stolen assets have also drawn court involvement: in May, a U.S. court order barred Arbitrum DAO from transferring 30,766 ETH that had been frozen from the attacker’s holdings.
Kelp says it has since moved to migrate rsETH’s bridging infrastructure to an alternative cross-chain standard.
Source: BeInCrypto
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