Evercrest sues LayerZero over $292 million KelpDAO exploit

Evercrest Technologies filed a notice of civil claim in the Supreme Court of British Columbia on Wednesday. The claim names LayerZero Labs Ltd., LayerZero Labs Canada Inc. and co-founder Bryan Pellegrino. The exploit drained $292 million from the KelpDAO restaking protocol in April. Evercrest alleges negligent misrepresentation. Evercrest also alleges negligence. Evercrest alleges defamation. The company seeks aggravated damages. The company also seeks punitive damages. KelpDAO used a 1-of-1 bridge configuration. LayerZero's verifier network was the only party confirming that tokens were 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 the default configuration had no problem. The filing says LayerZero explicitly directed Evercrest in March 2024 to use a 1-of-1 setup with its own verifier. The filing says LayerZero stated in January 2025 that a compromised verifier could at most fail to verify a message correctly. The filing says LayerZero warned a separate developer, USDT0, about risks in its default verifier configurations in late 2024 or early 2025. Evercrest says it received no comparable warning. The claim says an attacker placed malware on a LayerZero developer's computer on March 6. The attacker then tampered with LayerZero's nodes so they sent false readings to the verifier. On April 18, the attacker disabled third-party nodes that the verifier also used. The verifier was then told that 116,500 rsETH had been locked on Unichain when no tokens had been locked. The tokens were minted without backing because one verifier was required. Evercrest says it paused the bridges within about an hour. Evercrest also says it blocked a second attempt. LayerZero's incident statement said the single-verifier setup contradicted a multi-DVN model that LayerZero had consistently recommended to all integration partners. Pellegrino wrote that nobody should rely on a sole DVN. The filing says LayerZero later admitted that it had made a mistake by allowing its DVN to act as a 1-of-1 DVN for high-value transactions. Evercrest claims that it contributed 2,000 ETH to restore rsETH's backing. Evercrest also claims that more than $650 million was withdrawn after the exploit. The company says the KERNEL token fell and drew warnings from regulators and exchanges. Pellegrino called the claim meritless in a post. He said he would meet Evercrest in Vancouver to defend himself. No response to the claim has been filed. The allegations have not been tested in court.