KelpDAO Developer Sues LayerZero Over $292M Bridge Exploit

Decrypt reports that Evercrest Technologies, the company behind the KelpDAO restaking protocol, has filed a civil claim in the Supreme Court of British Columbia against LayerZero Labs Ltd., LayerZero Labs Canada Inc., and co-founder Bryan Pellegrino. The suit alleges negligent misrepresentation, negligence, and defamation stemming from the April exploit that drained $292 million from KelpDAO's bridges. Evercrest seeks aggravated and punitive damages. The filing was submitted Wednesday; no response has been filed and none of the allegations has been tested in court.

Bridge configuration: 1-of-1 verifier setup

KelpDAO's bridges operated a 1-of-1 setup, meaning LayerZero's own decentralized verifier network (DVN) was the sole party confirming that tokens had been locked on one chain before equivalent tokens were minted on another. According to the filing, LayerZero told Evercrest in February 2024 that its draft code was "good" and that there was "[n]o problem" using the default configuration. In March 2024, LayerZero explicitly directed Evercrest to use a 1-of-1 setup with LayerZero's own verifier. In January 2025, LayerZero stated that even if a verifier were compromised, the most it could do was fail to verify a message correctly.

The filing also says LayerZero warned a separate developer, USDT0, about risks in its default verifier configurations in late 2024 or early 2025, prompting that developer to run its own verifier. Evercrest says it received no comparable warning.

Exploit timeline per the claim

The claim describes the exploit as originating inside LayerZero. An attacker placed malware on a LayerZero developer's computer on March 6, then tampered with LayerZero's nodes so they fed false readings to its verifier. On April 18, the attacker disabled the third-party nodes the verifier also used, so the verifier was told 116,500 rsETH had been locked on Unichain when nothing had. With only one verifier required, the tokens were minted unbacked. Evercrest says it paused the bridges within about an hour and blocked a second attempt.

Defamation claims center on post-exploit statements

The defamation claims turn on public statements after the exploit. LayerZero's incident statement said the single-verifier setup contradicted a multi-DVN model it had "consistently recommended to all integration partners." Pellegrino wrote on Telegram and X that "[n]obody should be relying on sole DVN." Days later, according to the filing, LayerZero admitted it had "made a mistake by allowing [its] DVN to act as a 1-of-1 DVN for high-value transactions." Pellegrino has tweeted that the claim "continues to be meritless" and that he would meet Evercrest in Vancouver to defend himself.

Damages sought and case status

Evercrest claims damages including a 2,000 ETH contribution to restore rsETH's backing, more than $650 million withdrawn since the exploit, and a fall in the KERNEL token that drew regulator and exchange warnings. The case remains at the pleading stage in the Supreme Court of British Columbia.

LayerZero's formal response and any court-ordered discovery will clarify what instructions were given to integration partners versus what was communicated publicly.