KelpDAO has escalated its legal fight over a major cross-chain bridge exploit by filing a lawsuit against LayerZero, alleging that shortcomings in LayerZero’s security infrastructure helped enable the theft of roughly $292 million worth of rsETH earlier this year.

The filing, first reported by KelpDAO and reported in related coverage of the incident, targets LayerZero as well as its co-founder and CEO, Bryan Pellegrino. KelpDAO says LayerZero did not adequately disclose risks and failed to stop attackers from compromising its infrastructure, while it also alleges LayerZero reviewed and endorsed KelpDAO’s bridge deployment and configuration in writing.

Key takeaways

• KelpDAO claims LayerZero’s technology and security infrastructure contributed to the April rsETH bridge exploit that stole 116,500 rsETH.
• The lawsuit alleges LayerZero failed to disclose relevant risks and did not prevent attackers from compromising its internal systems.
• KelpDAO also alleges LayerZero reviewed and endorsed KelpDAO’s bridge configuration and deployment in writing before the incident.
• LayerZero previously attributed the loss to attackers compromising its internal nodes and approval process, while arguing KelpDAO’s setup relied too heavily on a single verification path.
• Pellegrino rejected the allegations as “meritless” and said he plans to defend the case in Vancouver.

From exploit to courtroom dispute

The legal move follows the April 18 attack, which resulted in the theft of 116,500 rsETH from Kelp’s LayerZero-powered bridge. According to earlier reporting from Cointelegraph, the haul was valued at about $292 million at the time.

In its account of the incident, LayerZero said attackers compromised its internal nodes and manipulated the verifier into approving a forged cross-chain message. LayerZero argued that the theft was possible because the bridge design relied on a single decentralized verifier network (DVN) as the only verification path.

LayerZero also said it recommended using multiple DVNs and later stopped acting as the sole required verifier for applications, an important detail because it suggests the protocol changed its posture after the incident. KelpDAO, however, disputes that narrative and argues that the core failure lies with LayerZero’s security practices.

KelpDAO’s accusations against LayerZero

KelpDAO said LayerZero failed to disclose risks in its technology and did not prevent attackers from compromising LayerZero’s infrastructure. The lawsuit further alleges that LayerZero reviewed and endorsed KelpDAO’s deployment and configuration in writing before the exploit.

KelpDAO framed the case as both a security response and an effort to correct what it sees as an inaccurate public record about responsibility for the breach. In a statement shared via KelpDAO’s account, the group emphasized that protecting users’ assets remains its top priority, while it seeks to hold LayerZero and Pellegrino accountable for the harm it says was caused to KelpDAO and the broader DeFi ecosystem.

Separately, KelpDAO also targeted the question of disclosure—essentially arguing that even if a bridge design includes certain dependencies, users and operators must be clearly informed about risks and threat models associated with those dependencies.

LayerZero’s stance: internal compromise and verifier design

LayerZero’s position, as described in prior coverage, focused on what happened inside its own system and why the message verification pathway worked the way it did. In its final incident report cited by Cointelegraph, LayerZero said internal nodes were compromised and that a forged cross-chain message was approved by its verifier.

LayerZero argued that the bridge released rsETH after receiving approval for the forged message—pointing to the fact that there was no requirement for a second independent verifier in the setup used for that deployment.

That distinction matters because it frames the dispute as more than a question of whether something went wrong; it becomes a debate over whether the dominant failure mode was inside LayerZero’s infrastructure, inside KelpDAO’s configuration choices, or a combination of both.

LayerZero also said it recommended the use of multiple DVNs and later stopped acting as the sole required verifier for applications—implying that the system design risk was mitigated after the exploit. The lawsuit, by contrast, suggests KelpDAO believes these controls and warnings should have been in place earlier.

Pellegrino rejects the claims; responsibility remains contested

LayerZero co-founder and CEO Bryan Pellegrino responded by calling KelpDAO’s claims “meritless,” according to a post shared on X. He also said he would defend the case in Vancouver.

The lawsuit therefore intensifies a dispute that had been brewing for months after the April incident. As Cointelegraph previously reported, the arguments have repeatedly returned to the same central fault line: whether the loss was caused primarily by compromise of LayerZero’s infrastructure, weaknesses or decisions in KelpDAO’s bridge configuration, or both.

In May, KelpDAO publicly disputed LayerZero’s account of responsibility. KelpDAO said that its DVN configuration had been previously discussed with LayerZero and “confirmed as secure,” while it accused LayerZero of failing to adequately warn it about the risks. In that period, KelpDAO also announced plans to migrate the rsETH bridge to Chainlink’s Cross-Chain Interoperability Protocol.

That migration plan is relevant to investors and users because it shows that KelpDAO did not wait for legal clarity to alter its operational posture. Still, legal filings aim to determine accountability—how the incident is ultimately characterized and who is held responsible for losses.

Cointelegraph attempted to obtain additional comment from LayerZero but did not receive a response before publication, according to the earlier reporting included in the source material.

For now, the key thing to watch is how the court frames the alleged “shared failure” described by each side—especially the claims around risk disclosure and whether LayerZero’s alleged written endorsement of KelpDAO’s configuration becomes central evidence. As the case develops, the most important unanswered question remains whether the evidence supports KelpDAO’s view that LayerZero’s security infrastructure and communications were the decisive factors, or whether LayerZero can persuade the court that the exploit was driven mainly by configuration choices at the application layer.

Crypto and DeFi projects continue to be hacked at a dizzying pace, and few days in recent weeks have been incident-free.

That said, Thursday was a particularly busy day, with three projects hit for a total of more than $11 million worth of crypto.

By the end of play, Payy Network had lost $1.8 million, Duelbits $7 million, and Meter $2.3 million.

Payy Network

The bridge connecting Payy Network, a rollup which offers on-chain payroll/treasury services, and Ethereum was first to be hit.

Pseudonymous on-chain investigator Specter first flagged suspicious withdrawals in a message to its Telegram group. Funded via privacy protocol Railgun, the attacker swapped $1.8 million of USDC for ETH.

The firm later confirmed the exploit, which drained the entire balance of its bridge, and paused all operations. It then clarified that the funds were “users’ non-custodial deposits to Payy Network/Payy Wallet,” but is yet to disclose the cause of the loss.

Read more: Across, Allbridge, TeleSwap lost $5.7M to bridge hacks in past week

Duelbits

Crypto casino and sports betting platform Duelbits was next up in a suspected private key compromise.

The estimated losses stacked up from blockchain security auditor PeckShield’s first tally of $4.3 million. Specter upped the ante to $4.9 million and then $5.9 million after identifying affected addresses on Bitcoin and Solana.

Duelbits’ own co-founder put the final number at approximately $7 million.

Read more: $2M stolen in triple attack on Fetch.ai, NuNet, and SingularityNET

The project was previously hacked for $4.6 million in 2024. At the time, auditor CertiK also suspected the loss to be due to a private key compromise.

Meter.io

EVM blockchain Meter.io also fell victim to a bridge attack, but this time, unbacked tokens were minted instead of existing deposits being drained.

Addressing the incident via X, the team pointed to a “block validation flaw” and informed users that “we’ve preserved the chain state. The recovery method is still to be decided.”

Tokens worth a reported $2.3 million were minted out of thin air before being dumped on the PancakeSwap decentralized exchange.

The sales crashed the price of both MTR and MTRG tokens, which are down almost 80% and 75%, respectively. 

Meter has also been hacked before, for $4.4 million back in 2022, in what was also a bridge hack.

Got a tip? Send us an email securely via Protos Leaks. For more informed news and investigations, follow us on X, Bluesky, and Google News, or subscribe to our YouTube channel.

Sudan’s bloody war has raged for more than three years, and the need for an armistice is urgent. In September 2025, the United States, the United Arab Emirates, Saudi Arabia and Egypt, who are leading mediation efforts, proposed a humanitarian truce. The effort failed. Other diplomatic initiatives have tried to bring civilians into the conversation. An April conference in Berlin included women’s groups and other organizations, but it failed to persuade the warring parties to engage with anyone, much less with civil society. For now, even progress toward a basic ceasefire seems unattainable, making a broader approach to ending the violence ever more distant.

Diplomats with involvement and knowledge of the Sudan talks describe gender as a “non-starter” with the Sudanese Armed Forces and Rapid Support Forces. Both factions have an interest in avoiding accountability for sexual violence and other atrocities while remaining focused on retaining their power. As Sudanese communities endure the war, diplomats are pursuing a narrow but pragmatic goal: finding a path to ceasefire while preserving space for later talks on who will have a voice in Sudan’s political future.

Switchboard’s September 25 support deadline has turned a six-day migration warning into a test of Solana’s price feeds. Current public documentation shows where its data remains part of an application’s design, but those pages cannot prove that a live market is still using the feed. Jito and marginfi provide two sharply different views of the exposure.

Switchboard has reached its stated September 25 end of technical support, leaving Solana applications to verify the price sources configured in their live programs.

The oracle project’s September 19 statement, as reproduced in coverage of the announcement, said its core development contributor Switchboard Technology Labs would wind down and all implementations were deprecated immediately. The team urged integrators to migrate to other providers, naming Pyth and RedStone. September 25 was described as the last day for existing support. A company ending support is a real operational milestone. It does not, by itself, prove that every onchain feed stopped updating at midnight or that every application once associated with Switchboard remained dependent on it.

Switchboard’s own documentation has named Kamino, Jito, marginfi and Drift as users. Those are historical integration claims from a provider that was selling an oracle service, not a real-time inventory of active feeds on September 25. Checking each project’s current documentation reveals a more complicated picture. Jito’s Tip Router pages still describe Switchboard in their pricing flow; marginfi’s September technical upgrade adds paths designed to avoid that dependency. One document can be stale while another anticipates a migration. Neither substitutes for an inspection of live account configuration.

The earlier Switchboard funding round was $7.5 million in May 2024. The amount is useful background on the venture’s history, but it gives no measure of today’s protocol exposure. The relevant count is the number and value of live markets whose risk calculations still take data from a feed that cannot be reliably updated, and that count cannot be inferred from a customer logo.

A listed integration is not an active feed

Switchboard’s public introduction describes on-demand feeds: applications create or call the data they need, and a price is made available through Solana accounts. Documentation can identify where a protocol knows how to read a Switchboard feed. It may not identify which option a particular market currently selects. A software development kit may support an oracle type long after the last bank switches away from it. Conversely, a website may change while a live reserve retains its older oracle account.

Three levels of evidence need to be kept apart. First is a marketing or integration page, which shows a relationship existed. Second is a program’s supported configuration, visible in technical documentation or code. Third is the live configuration and recent update history of the actual market. Only the third can support a claim that a named market still relied on Switchboard at a given time. Even then, a backup source may be configured, so the impact of a stopped primary feed must be checked against the relevant fallback and freshness rule.

Consider marginfi’s protocol documentation. Its oracle table retains SwitchboardPull and venue variants among available setups. It says a caller must crank a Switchboard pull feed just before use. The same table lists Pyth push feeds and Scope accounts as other setups. A reader could mistake the continued Switchboard row for proof that every marginfi bank still uses it. The table describes supported types, not a complete list of which bank uses which feed today.

Marginfi’s separate Program 0.1.11 note is more current and more specific. It instructed developers to upgrade the SDK to at least version 2.8.0 before September 4, saying banks would begin moving to new oracle setups from that date. The release added nine variants that do not depend on Switchboard, including Kamino Scope feeds and exchange-rate based pricing for certain liquid staking and principal tokens. The note does not say every bank had migrated by September 25. It does show that a project publicly documented a route away from the threatened dependency before the shutdown announcement.

The migration carries a surprising second failure mode. Marginfi says older SDKs cannot decode a bank configured with one of the new oracle enum values. A single bank with an unsupported value can prevent Project0Client.initialize and bank reads, not merely an action involving that bank. In other words, changing an oracle can fix one infrastructure dependency while breaking an integrator that has not updated its software. Marginfi’s document tells integrators how to avoid the SDK problem; it is not evidence that any particular user suffered it.

Project 0 has described unified margin across Solana venues, including Kamino and Drift. Cross-protocol interfaces create another layer at which an oracle migration must be read correctly. The note about older SDK versions is concrete evidence of an integration hazard, without proving a failure in Project 0 or any other named app. A responsible audit would check software versions and live lending-bank configurations before claiming an outage.

Jito’s Tip Router still documents Switchboard

Jito Foundation’s Tip Router overview says Switchboard determines the relative weight of assets such as JitoSOL and JTO held in vaults linked to the Tip Router. The overview identifies an onchain Tip Router program, a node-operator client and a permissionless cranker. Its pricing documentation names Switchboard as the current oracle feed and describes backup weights when feeds are unavailable.

The documents place Switchboard in a specific job: pricing vault assets for weight calculations in a tip distribution and restaking system. They do not say that an unavailable Switchboard feed would automatically liquidate a Solana lending position. Jito’s pricing page describes a fallback mechanism, which weakens the simplistic claim that a support sunset necessarily makes all Tip Router operations stop. The exact fallback values, activation conditions and current live oracle accounts still need a current program-state check.

The Tip Router overview showed a last-updated marker of nine months ago when checked on September 25. That age changes how it can be used. It establishes a documented design and identifies where to ask a technical question. It cannot establish that the present program has the same feed configuration. Jito may have updated onchain accounts without revising the page, or it may still use Switchboard with a fallback. Without a recent transaction inspection or a current statement from Jito, a named live dependency remains unverified.

Jito’s public GitHub release notes for Tip Router refer to retrying Switchboard oracle gateways in keeper operations. A codebase containing such logic likewise demonstrates technical integration, not necessarily a dependency of every vault at the time of publication. Code can preserve a compatibility path for months. The live question is whether recent price update transactions target a Switchboard account used by a vault still carrying value, and whether that account advances after the support deadline.

The distinction is often lost when all oracle users are placed in a single list. Jito’s described calculation affects relative asset weights in a distribution system. A lending market’s described calculation determines collateral value and borrower health. Both consume price data, but their failure paths differ. An audit that counts logos would assign the same severity to fundamentally different uses.

Kamino’s Scope is an aggregator, not a provider label

Kamino Finance’s public Scope repository describes an onchain aggregator that copies values from multiple oracle accounts into one price feed and validates updates under preset rules. Its README says a feed supports up to 512 prices and that the association between an index and a token pair is not wholly stored onchain. A downstream program may point to Scope while Scope itself relies on other feeds for the selected asset. Seeing Scope in a bank configuration is thus a starting point for tracing the actual data source, not the end.

The September marginfi note lists Scope as an option that does not depend on Switchboard for the new setup it describes. That does not imply every deployment of Scope on every date excludes every Switchboard source. An aggregator can change its underlying inputs. A complete dependency check needs both the consumer’s selected Scope account and the source mapping used to populate its entry. Kamino’s repository supplies the architecture, not a timestamped inventory of current mainnet sources for every application.

Kamino has continued bringing institutions into its lending ecosystem. Galaxy opened two stablecoin vaults on the platform in September. The existence of new vaults shows why naming a whole protocol as exposed without checking its individual assets would be unsound. A USDC vault, a liquid staking token reserve and a tokenized equity market can use different oracle paths. We have not verified that Galaxy’s vaults use Switchboard, so they are not included in a count of affected positions.

Similarly, the older list of Kamino, Jito, marginfi and Drift in Switchboard’s introductory material does not tell us the distribution of exposure among them. A project may use an oracle only for one market, use it as a fallback, or retain code after switching live feeds. The only defensible unit of analysis is a specific market or vault and its configured feed at a specified time. Without that unit, claims about funds at risk are marketing arithmetic run backward.

A stale feed has more than one possible effect

The technical consequence of a feed falling behind depends on the consuming protocol. A lending program generally needs a price to determine collateral value and borrowing capacity. If it rejects an old value, an action may fail or a market may pause under its rules. If it accepts stale data, a borrower might transact against a price that no longer matches the market. A fallback source may keep the market operating but introduce a new update rhythm or confidence rule. The protocol’s documentation and onchain configuration decide which path applies.

Marginfi explicitly says Switchboard pull feeds need to be cranked before use. An integrator must therefore supply a fresh update as part of its transaction path. Pyth push feeds, by contrast, are described as being kept fresh through Pyth’s infrastructure. Scope uses an aggregated account value selected by a configured entry index. Moving between these types changes the accounts a transaction needs and the code that checks them. The September SDK warning is one visible example of those changes reaching application software.

For Jito Tip Router, the public docs describe backup weights for unavailable feeds. Whether those backups preserve accurate reward allocation through a sustained outage is a question for live configuration and Jito’s operators, not something a documentation sentence resolves. If a feed keeps updating through independent node operators after the company stops support, no fallback may be triggered immediately. If updates cease but the backup is active, operations may continue with a different pricing method. These are conditional paths, not a prediction of the system’s present state.

An unrelated oracle incident led to liquidations on Vesu earlier in September. It illustrates that incorrect pricing can have economic effects, but it is not evidence of an incident at Switchboard, Jito or marginfi. A shutdown notice should not be turned into a liquidation claim by analogy. The sign of an actual event would be stale account timestamps, failed transactions, a protocol pause or identified losses, none of which has been shown here for the September 25 deadline.

Solana’s move to 250 millisecond slots changed the pace at which blocks are produced, but it did not guarantee that an external price source updates. Faster slots can carry a new price sooner when one exists. They cannot manufacture a price when the node supplying it stops. A protocol’s freshness test may be measured by slot, time or another rule, so a change in the network clock may alter how developers interpret old feed configurations.

Who bears the migration work?

The oracle operator publishes or coordinates data, but the consuming protocol chooses the account its program reads and the limits it places on that price. A lending protocol can require governance or an administrator to change oracle addresses for its markets. Its front end and third-party integrators then have to construct transactions with the right additional accounts. Users may only notice a rejected borrow or a paused market, long after the operator and protocol have made their technical decisions.

An operator ending support does not necessarily have the power to rewrite a customer’s program configuration. The Switchboard notice urged users to migrate because integration owners must act. Projects should be assessed by the addresses and account updates they control. If an application already moved to Pyth before September 19, the later support deadline has no direct effect on that market. If it still selects a Switchboard feed and has no working backup, the feed’s behavior after September 25 is the concrete issue.

The strongest opposing reading of the shutdown alarm follows from marginfi’s own September note and Jito’s documented backup. Applications can design redundancy or move ahead of a vendor exit; the code and documents show mechanisms for doing so. Switchboard’s on-demand model can leave some feed infrastructure running independently even if the core contributor has stopped support. The notice did not publish a verified schedule at which every account would halt, and we found no primary evidence establishing such a universal cutoff.

There is a different kind of continuity question for a protocol that made its own fallback. A backup price can prevent a total stop while pricing an asset less frequently or with a different source set. For a reward distribution process, a temporary backup weight may keep epoch accounting moving, although the allocation may then rely on the backup’s assumptions. For a lending market, the fallback could change the price used in a health check. These are not claims about current Jito or marginfi settings. They show what a maintainer must disclose before users can judge whether a migration is complete in operational terms, not merely whether transactions still execute.

A provider wind-down can have delayed effects as well. Code written to request on-demand prices may succeed while an independent gateway answers, then fail when that gateway is retired or its operators stop updating a specific asset. An observer needs several post-deadline timestamps, not a single successful transaction, to infer continued service. The same discipline applies to a failed transaction: one user’s error may arise from a stale SDK or insufficient account input instead of an unavailable oracle. Marginfi’s migration document supplies an explicit example of a software decoding failure that could otherwise be mislabeled as an oracle outage.

There is a limit to that reassurance. A fallback described nine months earlier needs validation against current state, and a migration option described in September is not proof every bank took it. The two documents supply credible reasons not to assume catastrophe, while leaving a measurable gap. The fair conclusion is narrower than both the promotional and alarmist versions: public documents identify candidate dependencies and escape routes; a current market-by-market configuration audit is needed to establish any remaining exposure.

The live inventory is still the missing document

The original reporting here compares Switchboard’s list of four prominent integrators with current primary documents from Jito, marginfi and Kamino. It yields two verified documentary findings. Jito’s older Tip Router documentation names Switchboard for vault pricing and a fallback for unavailable feeds. Marginfi’s September 0.1.11 note describes nine new setups independent of Switchboard and warns of a separate SDK break if integrators do not upgrade. Kamino’s Scope repository explains why an aggregator label alone cannot identify every upstream data source.

The work does not produce a count of live unmigrated feeds, user funds exposed or an outage at any named protocol. The available public pages do not contain a synchronized September 25 snapshot of all oracle accounts, latest successful updates, fallback settings and amounts supported by each market. Claiming a specific dollar total from protocol TVL would be indefensible, because the whole protocol’s assets do not necessarily share the same oracle. The precise headline question remains open at the live-account level.

A proper count would use the market as the row, not the protocol. For each active lending bank, derivative market or reward vault, the auditor would record its program address, selected oracle type, oracle account, backup source if any, latest successful price update, maximum permitted age and the value of positions actually dependent on that particular price. Duplicate markets that share one oracle account should not be counted as distinct feeds; one market using two independent oracles should not be counted as wholly dependent on either without reading its fallback logic. The timestamp of the market configuration matters because an administrator could change a feed after the observation.

This method explains why even a true statement such as a protocol supported 550 feeds in the past is insufficient for the present question. A feed can exist without an active borrower, can have a price update without a consuming market, or can be referenced only in dormant code. A count of feed accounts measures infrastructure. A count of configured markets measures dependency. A count of positions and collateral actually touching those markets measures economic exposure. None is interchangeable with total assets deposited in all products run by a project.

There is a further verification step when a source is an aggregator. The consumer may identify a Scope account and entry index, while the Scope mapping points onward to one or more providers. An update in the Scope account after September 25 proves an aggregator produced a value, but it does not by itself prove Switchboard continued to supply the underlying price. The investigator needs the selected entry and source configuration for that update. Kamino’s repository notes that token-pair labels are not entirely stored onchain, so external configuration or maintainer documentation may be needed to map an index to its asset. Where that mapping is unavailable, the result should be recorded as unknown, not silently attributed to Pyth or Switchboard.

What to watch

• Market oracle addresses: Compare each active bank or vault’s configured feed with the documented Switchboard accounts.
• Price update timestamps: Check whether an identified feed continues publishing fresh values after September 25.
• Fallback configuration: Look for the source and freshness limit used if a primary feed falls behind.
• Recent program transactions: Check whether borrowing, settlement or tip distribution still completes for the affected market.
• Dated maintainer updates: Look for a named migration, market pause or remaining dependency, supported by an account or program address.

Record the observation time for each check; a screenshot without a block or timestamp can quickly become stale.

Marginfi’s upgrade note states that a bank using a new oracle enum value can make an older SDK fail to initialize its client, even if a user does not interact with that particular bank. The instruction to use SDK version 2.8.0 or later was published ahead of September 4’s migration start, three weeks before Switchboard’s support deadline.

FAQ

Disclaimer: This article is for information and educational purposes only and does not constitute financial or investment advice. Figures reflect regulatory filings and reporting available at the time of writing and change with each disclosure. Nothing here is a recommendation to buy, sell, or hold any security or asset. Always do your own research. Information is accurate as of September 25, 2026.

KelpDAO has escalated its dispute with cross-chain protocol LayerZero by filing a lawsuit tied to the roughly $292 million exploit that hit its rsETH bridge earlier this year. In the complaint, the restaking and tokenization platform alleges that shortcomings in LayerZero’s security infrastructure helped enable the attack.

According to KelpDAO, LayerZero failed to properly disclose risks in its technology and did not stop attackers from compromising components of its infrastructure. The filing also names LayerZero co-founder and CEO Bryan Pellegrino as a defendant, setting up a legal fight over who—if anyone—bears primary responsibility for the loss.

Key takeaways

• KelpDAO’s lawsuit targets LayerZero and names CEO Bryan Pellegrino over the April 18 rsETH bridge exploit.
• The complaint alleges LayerZero did not disclose key risks and that attackers were able to compromise LayerZero’s infrastructure.
• KelpDAO also claims LayerZero reviewed and endorsed Kelp’s bridge deployment and configuration in writing.
• LayerZero’s prior incident report attributed the theft to compromise of its internal nodes and the subsequent approval of a forged cross-chain message.
• The case reflects a broader pattern in DeFi cross-chain disputes: responsibility is contested between protocol infrastructure failures and application-level design choices.

The lawsuit: allegations of undisclosed risks and infrastructure compromise

KelpDAO said in its filing that LayerZero did not adequately disclose risks associated with its technology and did not prevent attackers from compromising the systems underlying its cross-chain verification process.

The lawsuit further alleges that LayerZero reviewed and supported KelpDAO’s deployment and configuration before the exploit, according to a document made available by KelpDAO. This is a central part of the dispute because it challenges LayerZero’s narrative that the loss was primarily driven by how KelpDAO configured its bridge.

KelpDAO framed the legal action as both a security-focused effort and an attempt to correct what it views as an inaccurate account of the incident. It said holding LayerZero and Pellegrino accountable is necessary to address the harm caused to KelpDAO and to parts of the broader DeFi ecosystem.

LayerZero’s leadership has denied the core allegations. Pellegrino characterized the claim as “meritless” and indicated he would defend the case in Vancouver, signaling that the protocol intends to contest the complaint rather than pursue a settlement immediately.

What happened in April—and why the blame is contested

On April 18, an attack on KelpDAO’s LayerZero-powered bridge led to the theft of 116,500 rsETH, which was valued at about $292 million at the time, according to earlier reporting by Cointelegraph. The loss centered on the way cross-chain messages were verified and approved before funds moved.

LayerZero’s final incident report, as described by Cointelegraph, stated that attackers compromised internal nodes and caused a verifier to approve a forged cross-chain message. In that account, the theft was enabled by the bridge’s reliance on a single decentralized verifier network (DVN) as its only verification path.

In practical terms, once LayerZero’s verifier approved the forged message, Kelp’s bridge released rsETH. LayerZero argued that the risk of this outcome was tied to the bridge architecture—specifically, the lack of a second independent verification step.

LayerZero said it had recommended using multiple DVNs and later stopped serving as the sole required verifier for applications that depend on a single DVN arrangement. That position effectively shifts responsibility toward KelpDAO’s configuration choices, even if LayerZero acknowledges that its infrastructure components were involved.

KelpDAO contests that shift. In May, KelpDAO said its DVN configuration had been discussed with LayerZero and “confirmed as secure,” while accusing LayerZero of failing to adequately warn it about relevant risks. KelpDAO has since announced plans to migrate the rsETH bridge to Chainlink’s Cross-Chain Interoperability Protocol, reflecting a move away from the LayerZero-dependent architecture that was implicated in the dispute.

Why configuration decisions matter in cross-chain security

This case highlights a persistent tension in cross-chain protocols: even when a cross-chain platform provides verification infrastructure, the security outcome can depend heavily on how applications select and combine verification paths.

LayerZero’s incident narrative emphasizes that using only one DVN created a structural vulnerability—meaning that if that verification path were compromised, the bridge could still process fraudulent messages. KelpDAO’s counter-narrative focuses on what it says were assurances and endorsements from LayerZero, arguing that the risks were not properly communicated and that LayerZero accepted responsibility for the setup.

For investors and users, the distinction is not academic. Cross-chain incidents rarely fit neatly into a single bucket of “infrastructure failure” versus “application misconfiguration.” Instead, the legal question tends to revolve around whether the infrastructure provider warned partners about known failure modes and whether the integration conformed to what both sides understood to be secure at the time.

That uncertainty is also a practical concern for builders operating in this space: a protocol’s incident report may focus on one set of technical causes, while an application’s complaint may spotlight integration assumptions, documentation, and prior guidance.

What to watch next as the dispute moves into court

With KelpDAO now asking the court to rule on LayerZero’s alleged failures—alongside the decision to include Pellegrino personally—the next phase of the case will likely center on evidence about risk disclosure and integration oversight. KelpDAO’s claims that LayerZero reviewed and endorsed the deployment in writing will be particularly important if the parties present documentary records.

At the same time, LayerZero’s defense will need to reconcile its earlier incident framing—compromised internal nodes and a forged message—with KelpDAO’s argument that the configuration was previously validated. Readers should watch for how each side explains the boundary between verifier-level security and application-level bridge design, because that boundary may determine whether the court treats the incident as primarily an infrastructure problem, a configuration problem, or a combination of both.