KelpDAO has initiated legal action against LayerZero, claiming that the cross-chain protocol's security failures played a significant role in the $292 million exploit of its rsETH bridge earlier this year. The lawsuit alleges that LayerZero not only failed to disclose risks but also endorsed KelpDAO's bridge setup prior to the attack.
The lawsuit, which also names LayerZero's co-founder and CEO Bryan Pellegrino, asserts that the company did not take adequate measures to prevent the breach. KelpDAO emphasized the need to hold LayerZero accountable for the damages inflicted on both its platform and the broader DeFi ecosystem.
Pellegrino has labeled the lawsuit as "meritless" and plans to defend against it in Vancouver. This legal dispute marks a significant escalation in a months-long argument regarding the cause of the exploit, which resulted in the theft of 116,500 rsETH.
In the aftermath of the attack, LayerZero stated that its internal nodes were compromised, leading to a forged cross-chain message approval. The company argued that KelpDAO's reliance on a single decentralized verifier network (DVN) was a critical factor in the exploit.
KelpDAO, however, disputes this account, asserting that its DVN configuration was previously validated by LayerZero as secure. Following the incident, KelpDAO announced plans to transition its rsETH bridge to Chainlink’s Cross-Chain Interoperability Protocol.