Arbitrum said Monday that it has frozen more than 30,000 Ether—worth about $71.2 million—linked to the recent exploit of Kelp DAO.
According to Arbitrum, its 12-member Security Council took “emergency action” to lock down 30,766 ETH held in a wallet associated with the attack. The funds have since been moved to an intermediary frozen wallet, making them inaccessible to the original address and only transferable through further governance decisions.
Kelp DAO, a liquid restaking protocol, was hacked for at least $293 million on Saturday via its LayerZero-powered bridge, with LayerZero attributing the attack to North Korea.
The exploit has triggered millions of dollars in “bad debt” across DeFi, as attackers used stolen Kelp tokens as collateral to borrow assets on Aave.
The decision by Arbitrum to freeze funds has sparked debate within the crypto community. Critics argue that such intervention runs counter to the core principles of decentralization, while supporters say it strengthens security and preserves network integrity.
Following the move, several users on X questioned Arbitrum’s decentralization, pointing to the ability of a governing council to freeze assets.
Griff Green said the council “did not make this decision lightly,” noting that the move came after extensive technical, ethical and political discussions. He added that nine of the 12 council members voted in favor of the freeze, though further details were not disclosed.
Arbitrum stated that the decision was made with input from law enforcement and emphasized that the action aimed to protect the network’s security and integrity without affecting regular users or applications.
