Arbitrum Security Council Freezes 30,766 ETH Linked to KelpDAO Exploit

The Arbitrum Security Council has taken emergency action to freeze 30,766 ETH (worth $70 million) connected to the KelpDAO exploit. The action was taken to block attacker access and protect user funds, but it has also raised concerns over decentralization in crypto systems.

Arbitrum Freezes 30,766 ETH After KelpDAO Exploit

Today on X, the Arbitrum Security Council announced that it has frozen 30,766 ETH linked to the KelpDAO exploit and moved it to a secure wallet after a major hack. 

The council carefully considered the decision before taking action. Out of 12 council members, nine voted in favor of freezing the assets. The move came after close coordination with law enforcement, who shared information about the exploiter’s identity. 

“The Security Council identified and executed a technical approach to move funds to safety without affecting any other chain state or Arbitrum users.” 

The team ran deep technical checks to ensure the transfer did not affect any users or applications.

Threat researcher Vladimir S. praised the decision, saying, “Arbitrum just froze $70M in ETH hacked by DPRK-associated attackers in a recent KelpDAO incident. Nicely done!”

The frozen funds will stay locked until Arbitrum governance, in coordination with relevant legal authorities, decides the next course of action.

A Major Hack, A Fast Response

It started on April 18, 2026. Attackers exploited a weakness in Kelp DAO’s LayerZero-powered bridge and walked away with 116,500 rsETH, a liquid restaking token issued by Kelp DAO. 

The exploit targeted compromised verifier infrastructure, giving the attackers a clean entry point to drain funds worth an estimated $292 million.

Two days later, Arbitrum moved. And instead of reversing the chain or affecting other users, the council used a targeted approach. It secured only the affected funds without disrupting the broader network.

This helped recover roughly a quarter of the stolen assets, making it one of the more effective responses to a major DeFi exploit.

Debate Over Decentralization and Control

Not everyone is happy with this move. Community members argue that freezing funds goes against the core idea of decentralization.

One X user questioned, “So a council can just freeze 30k ETH, and we’re still calling this decentralized?”

Leonidas, creator of the DOG memecoin, went further, stating,

“Decentralized has become a marketing term. Only Bitcoin is actually decentralized.”

Another user drew a sharp comparison: “WLFI is accused of wrongfully freezing user assets, while ARB froze stolen funds linked to DPRK hackers. One is ethically accepted, the other is criticized — but both prove the same point.”

A user named monerify raised a deeper concern, asking whether a compromised council could theoretically control all on-chain funds. 

Ripple CTO David Schwartz stepped in to clarify: “They can make the chain claim that they did whatever they want to all of the funds on the chain. But they cannot compel anyone to listen to those claims. Everyone else can make different claims and choose which set of claims to honor.”

What Next?

For now, the funds will remain frozen. Arbitrum governance now controls the stolen ETH, keeping it locked in a secure wallet.

No timeline has been set for the final decision, but the process will involve coordination with law enforcement, given the suspected DPRK-linked attackers behind the exploit.

For Kelp DAO users, the recovery of even a quarter of the stolen funds is a big relief.