Decentralized liquid staking protocol KelpDAO has filed a lawsuit against cross-chain protocol LayerZero and its co-founder, Bryan Pellegrino, alleging that undisclosed technological weaknesses enabled a massive exploit.
The legal action follows an April 22 attack that drained 116,500 rsETH, valued at approximately $292 million. KelpDAO stated that the incident was a direct result of LayerZero's failures, including a failure to disclose weaknesses and risks inherent in its technology and an inability to prevent the infiltration of its security infrastructure.
According to KelpDAO, LayerZero and Pellegrino publicly blamed the staking protocol for the failures over the following months. In response to the filing, Pellegrino dismissed the lawsuit as meritless, stating he will defend himself and LayerZero in a British Columbia court in Vancouver.
The April exploit triggered severe aftershocks across the decentralized finance ecosystem. The incident contributed to a liquidity crisis that forced Aave, a major lending pool, to borrow $300 million to meet user withdrawal demands and ultimately erased $20 billion in total value locked across DeFi.
KelpDAO stated that it has since migrated the rsETH bridge to a more secure cross-chain security standard to protect user assets, while pursuing accountability for the harm caused to the broader ecosystem.
