KelpDAO filed a lawsuit against LayerZero over a $292M bridge exploit, alleging security failures and risks linked to its 1-of-1 verifier setup.
KelpDAO has filed a lawsuit against LayerZero and co-founder Bryan Pellegrino. The case follows a $292 million bridge exploit. KelpDAO claims LayerZero did not reveal significant technology risks prior to the exploit. The protocol also claims LayerZero failed to prevent an attack on its security infrastructure.
KelpDAO Accuses LayerZero Over 116,500 rsETH Bridge Loss
KelpDAO says the incident enabled the attackers to exploit vulnerabilities in the bridge. The attackers reportedly stole approximately 116,500 rsETH in the attack.
Today we filed a lawsuit against LayerZero and its co-founder, Bryan Pellegrino, to right the wrongs associated with the exploit of rsETH’s LayerZero bridge earlier this year. For more details, please refer to the statement below.https://t.co/gPQTPeM0Zh
— Kelp (@KelpDAO) September 25, 2026
Furthermore, KelpDAO claims that the bridge had a verifier configuration of 1-of-1. The protocol argues that this setup created a major security weakness for the bridge.
KelpDAO also claims LayerZero reviewed and endorsed its deployment configuration in writing. So, part of the lawsuit is whether LayerZero took responsibility for that configuration.
The conflict comes after months of public wrangling between the 2 parties. According to KelpDAO, LayerZero and Pellegrino “took the blame” for the issues arising from the exploit.
But KelpDAO refutes this claim and states that LayerZero was directly responsible for the security issues. The protocol now calls for the court to decide who caused the damages that ensued.
LayerZero co-founder and CEO Bryan Pellegrino has rejected KelpDAO’s allegations. Pellegrino said the claims were “meritless” and LayerZero will defend itself.
KelpDAO says the legal battle will be fought in Vancouver courts. The case could thus offer more clarity on responsibilities for the security of bridges.
KelpDAO Moves rsETH Bridge to New Security Standard
In the meantime, KelpDAO claims it has already made efforts to enhance user asset protection. The protocol is transitioning the rsETH bridge to a “more secure cross-chain security standard”.
The migration is part of the response to the exploit and follows the exploit. The protocol states that security of user assets is its top priority.
The lawsuit also seeks to establish a public record about the events surrounding the exploit. According to KelpDAO, their public complaint outlines the events and allegations against LayerZero.
The case serves as a reminder of the wider security issues with cross-chain bridges in DeFi. These systems are used to link blockchain networks, but they also may create extra technical and verification risks.
In addition, the conflict demonstrates the legal issues that can be raised by bridge accidents other than asset damage. Disagreements can arise between developers, infrastructure providers, and protocols regarding security responsibilities.
KelpDAO has filed its grievance in the legal system. LayerZero, on the other hand, is likely to challenge the claims as the case continues.
The $292 million incident now involves both technical and legal disputes. The responsibility of the parties may be decided in court proceedings.
For KelpDAO, the lawsuit is an attempt to hold them accountable for the exploit. The case is an opportunity for LayerZero to formally dispute the allegations.
The case is still under dispute, and the court will hear arguments from both sides. The allegations of KelpDAO should thus be deemed claims until proven otherwise in court.
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