Evercrest Technologies, the developer behind KelpDAO, has initiated a lawsuit against LayerZero Labs and its CEO, Bryan Pellegrino, in the Supreme Court of British Columbia. The legal action follows a major security exploit in April that resulted in the loss of $292 million from the restaking protocol. The plaintiff alleges that LayerZero provided written instructions to use a specific bridge configuration, which the protocol later blamed for the vulnerability.
According to the court filing, Evercrest claims that LayerZero explicitly directed the use of a 1-of-1 verifier setup in March 2024. The lawsuit asserts that LayerZero confirmed the draft code was acceptable in February 2024. Evercrest further alleges that while LayerZero warned other developers about risks in default configurations in late 2024 or early 2025, it failed to provide similar warnings to KelpDAO.
The exploit occurred after an attacker compromised a LayerZero developer's computer on March 6, allowing them to manipulate nodes. On April 18, the attacker disabled third-party nodes, leading to the unauthorized minting of 116 500 rsETH tokens. Evercrest reports that it halted the bridges within an hour of the incident to prevent further losses.
The lawsuit includes claims of defamation, negligence, and negligent misrepresentation. Evercrest seeks aggravated and punitive damages, citing a 2 000 ETH contribution to restore backing, over $650 million in withdrawals, and a decline in the value of the KERNEL token. Bryan Pellegrino has publicly stated that the claims are meritless and intends to defend the case in court.
