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Arbitrum’s Security Council has frozen 30,766 ETH, valued at approximately $71 million, in response to the recent Kelp DAO exploit involving its liquid restaking token, rsETH. The emergency action followed a $292 million breach over the weekend, in which attackers exploited vulnerabilities in Kelp’s LayerZero-powered bridge infrastructure.
The frozen funds represent about a quarter of the total stolen assets. Arbitrum said the ETH has been moved to a secure intermediary wallet. Access to the wallet requires additional Arbitrum governance decisions, which effectively removes control from the attacker’s original address.
Arbitrum also stated that the intervention was carried out based on input from law enforcement agencies regarding the suspected identity of the exploiter.
rsETH is a liquid restaking token issued by Kelp DAO, designed to let users maintain liquidity while participating in Ethereum restaking. In the exploit, attackers withdrew around 116,500 rsETH by compromising verifier systems.
LayerZero has preliminarily linked the attack to North Korea’s Lazarus Group.
Arbitrum, a major Ethereum layer-2 scaling solution, rarely exercises governance-level intervention at this scale. Its Security Council, made up of elected members, holds emergency powers intended to protect the network during critical incidents. While Arbitrum’s action is positioned as protective in this case, it has also renewed debate about decentralization and control within blockchain ecosystems.
The freeze offers Kelp DAO a partial recovery pathway, easing some of the financial damage while broader recovery efforts continue. The project is working with partners on a recovery fund and evaluating options including loss socialization, legal coordination, and reopening paused services.
The incident also intensifies an ongoing dispute between Kelp DAO and LayerZero over accountability for the exploit. Whether additional funds can be recovered may depend on the attacker’s movements across other blockchain networks and whether similar emergency measures are taken elsewhere.
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