KelpDAO has officially filed a lawsuit against cross-chain infrastructure provider LayerZero and its CEO Bryan Pellegrino in a British Columbia court, Canada, on September 25, 2026. The legal case centers on an April 18, 2026 hacking incident in which 116,500 rsETH worth $292 million was stolen from a KelpDAO bridge powered by LayerZero technology - making it the largest exploit in the DeFi ecosystem throughout 2026.
KelpDAO accuses LayerZero of failing to disclose vulnerabilities in its technology and being unable to prevent hackers from penetrating its security infrastructure. The allegations are further compounded by KelpDAO’s claim that LayerZero had reviewed and granted written approval for the bridge configuration prior to the breach.
A Fatal Single Point of Verification
LayerZero’s final incident report confirmed that attackers managed to compromise one of its internal nodes. This breach allowed LayerZero’s verifier system to pass fraudulent cross-chain messages, triggering the theft of hundreds of millions of dollars in funds. However, rather than taking full responsibility, LayerZero argued that the losses stemmed from KelpDAO’s own bridge design.
According to LayerZero, Kelp’s bridge relied solely on a single Decentralized Verifier Network (DVN) operated by LayerZero, without incorporating a second independent verification layer. The absence of this extra security layer caused the compromise of a single node to have fatal consequences for the entire rsETH bridge system.
Defense in Vancouver Court
Bryan Pellegrino immediately responded to the court filing, calling KelpDAO’s lawsuit meritless. He affirmed that his company will defend itself and contest the allegations in a Vancouver court. The multimillion-dollar lawsuit presents a sharp contrast for LayerZero, which recently partnered with Anchorage Digital to provide banking stablecoin infrastructure.
For its part, KelpDAO has discontinued the legacy configuration following the $292 million incident. Its rsETH bridge has been migrated to a new cross-chain security standard claimed to be more resilient against similar attacks. The upcoming trial in Canada will test the extent of an infrastructure provider’s liability when its defense layers fail to stop attackers.
Reported via Cointelegraph.
Read also: What Is DeFi (Decentralized Finance)?
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
