Kelp DAO has filed a lawsuit against LayerZero and one of the protocol's co-founders in connection with the exploit that drained roughly $292 million from its restaking product, rsETH, according to a report by BeInCrypto.

The suit marks a significant escalation in one of the largest DeFi security incidents on record, moving the dispute from the domain of on-chain forensics into the courtroom. Kelp DAO, the issuer of rsETH, is now seeking to hold LayerZero — the cross-chain messaging infrastructure provider — and a named co-founder legally accountable for losses tied to the exploit.

The filing centers on the $292 million figure, which represents the scale of the assets at issue in the exploit. By naming both the corporate entity and an individual executive, Kelp DAO is pursuing a dual-track theory of liability: one aimed at the company whose infrastructure was implicated in the incident, and another at personal responsibility at the founder level.

The legal action carries substantial implications for how responsibility is allocated across the modular DeFi stack. Kelp DAO built rsETH as a liquid restaking token, and the product's operations intersected with LayerZero's cross-chain messaging architecture. The lawsuit now forces the question of where fiduciary and technical duties begin and end when an integrated protocol suffers a catastrophic loss. If Kelp DAO's claims advance, integration partners and infrastructure providers across the sector could face exposure to civil liability they have generally treated as contractually or structurally out of scope.

For LayerZero, the suit represents both a legal and a commercial risk. The protocol positions itself as connective tissue for multichain asset transfer, and its value proposition depends on counterparties trusting that its messaging layer will not become a point of failure or a source of unrecoverable loss. Litigation of this magnitude, regardless of outcome, complicates that pitch. Prospective integration partners typically conduct legal due diligence, and an active suit over a nine-figure exploit will feature prominently in that process.

The personal claim against a co-founder is equally consequential. Founder-level liability in DeFi remains largely untested, and most disputes to date have resolved through negotiation, reimbursement, or quiet settlement. A court proceeding that examines an individual executive's conduct in relation to a protocol exploit could set a precedent that reverberates well beyond the two parties involved.

Kelp DAO, for its part, is signaling that it views litigation as the most credible path to recovery for the $292 million at stake. That choice reflects a broader shift in the restaking and liquid-token sector, where issuers increasingly operate with institutional scale but have historically lacked institutional recourse when integrated systems fail.

The case will now proceed through pleadings, with the immediate question being whether LayerZero and the co-founder move to dismiss or contest the claims on the merits. Discovery, if reached, would put the technical sequence of the exploit and the parties' respective responsibilities under judicial scrutiny — an outcome the DeFi infrastructure sector has so far avoided.