KelpDAO sues LayerZero and CEO over $292M rsETH bridge exploit
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Summary
KelpDAO has filed a lawsuit against LayerZero and its co-founder Bryan Pellegrino, accusing them of undisclosed vulnerabilities that led to a $292 million DeFi exploit in April 2026. The exploit drained 116,500 rsETH tokens and triggered a significant liquidity crisis, wiping out $20 billion in decentralized finance deposits. Pellegrino called the lawsuit meritless and vowed to defend himself and LayerZero in a British Columbia court.
Why it matters
The exploit caused a major liquidity crunch in the DeFi sector, forcing platforms like Aave to borrow $300 million to fulfill withdrawals, and highlighting ongoing structural risks in decentralized finance. KelpDAO views the lawsuit as necessary to hold LayerZero accountable for the impact on its protocol and the broader DeFi ecosystem. The source does not elaborate further on wider market or policy implications.
Key context
The attack on April 22 was carried out by an alleged North Korean hacking group that exploited LayerZero's universal bridge technology weaknesses. KelpDAO controlled a significant portion of the rsETH token supply at that time, increasing its exposure. After the breach, KelpDAO moved to enhance security by migrating rsETH’s bridge to a more robust cross-chain standard.
Key numbers and entities
KelpDAO, LayerZero, Bryan Pellegrino, Aave, North Korean hack group. $292 million lost in the exploit, 116,500 rsETH tokens drained, $20 billion of DeFi deposits erased, and $300 million borrowed by Aave.
What remains unclear
Details about the specific technical weaknesses exploited in LayerZero’s protocol are not provided. The legal arguments and potential outcomes of the lawsuit remain unspecified. Information on LayerZero’s planned security improvements or response strategy beyond Pellegrino’s denial is absent.