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Arbitrum’s Security Council has frozen 30,766 ETH, worth about $71 million, tied to the $292 million rsETH exploit against Kelp DAO. The emergency action moves the funds into a governance-controlled wallet that can only be accessed through further Arbitrum governance approval, preventing the original exploiter from retrieving the seized assets.
The freeze was carried out with input from law enforcement and, according to Arbitrum, did not impact other Arbitrum users or applications. The transfer was completed at 11:26 p.m. ET on April 20, based on Arbitrum’s statement on X.
The Security Council froze ETH held in an Arbitrum One address connected to the KelpDAO exploit. The funds are linked to rsETH, a liquid restaking token issued by KelpDAO that represents a user’s position in restaked ether (ETH). After the transfer, the stolen funds are no longer under the control of the address that originally held them.
Arbitrum said the move recovers roughly a quarter of the assets drained from Kelp’s LayerZero-powered bridge on Saturday, when attackers pulled 116,500 rsETH by exploiting compromised verifier infrastructure.
LayerZero attributed the attack, with preliminary confidence, to North Korea’s Lazarus Group.
As a layer-2 blockchain built on top of Ethereum, Arbitrum processes transactions more cheaply while settling them back to the main chain. Its Security Council consists of elected signers with emergency powers to take protective action in situations like this. However, governance-level interventions involving user funds are rare and can be controversial because they introduce discretionary control into a permissionless system.
The freeze leaves Kelp with a partial recovery option, in addition to any further clawbacks that law enforcement and chain-tracing firms may pursue. It also intensifies an ongoing dispute between Kelp and LayerZero over responsibility for the exploit and how remaining losses should be shared.
With $71 million effectively offset by the frozen amount, any broader socialization of remaining losses now has a larger baseline to account for before legal coordination, insurance, or treasury contributions come into play.
Kelp said it is coordinating with ecosystem partners on a recovery fund and weighing next steps involving unpausing, loss socialization, and legal coordination with affected counterparties. LayerZero has not publicly commented on the Arbitrum freeze.
Whether additional stolen funds can be frozen depends on where the attacker moved rsETH or its derivatives before consolidating holdings, and whether other chains with similar emergency powers choose to act on their portions of the flow.
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