Arbitrum Freezes $71M Tied to Kelp DAO Hack; Security Council Takes Action

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What to know:

A chunk of the Kelp DAO haul is no longer going anywhere.

On Monday night, Arbitrum’s Security Council took action to protect around $71 million worth of Ether (ETH) – approximately 30,766 ETH. They moved the funds, which are connected to the recent $292 million rsETH hack, into a special wallet. This wallet can only be accessed if Arbitrum’s community governance system approves it, adding an extra layer of security.

rsETH is a token from KelpDAO that lets you easily use your staked Ether (ETH) in other applications. It shows how much ETH you have restaked.

The council stated they took action based on information from law enforcement to identify the person exploiting the system. They froze the funds without disrupting regular Arbitrum users or applications.

According to a statement on X from Arbitrum, the transfer of funds finished at 11:26 p.m. Eastern Time on April 20th. The address that initially held the stolen funds no longer has control over them.

This recovery effort restores roughly a quarter of the funds stolen from Kelp’s bridge on Saturday. Attackers had drained 116,500 rsETH by taking advantage of weaknesses in the system used to verify transactions. LayerZero currently believes, based on early investigations, that the attack was carried out by the Lazarus Group, a hacking organization linked to North Korea.

Arbitrum is a blockchain that builds on top of Ethereum, allowing for faster and cheaper transactions which are then finalized on the main Ethereum network. It has a Security Council – a group of elected representatives – who can step in during emergencies to protect the network. However, using these powers to directly control user funds is unusual and debated, as it adds centralized control to what is otherwise a decentralized system.

The court order allows Kelp to potentially recover some funds, in addition to anything law enforcement or blockchain analysis companies might be able to retrieve.

This development further complicates the disagreement between Kelp and LayerZero regarding who should cover the losses from the exploit. Before seeking legal solutions, insurance payouts, or using funds from their reserves, there’s now a $71 million buffer to potentially offset the remaining damages.

Kelp is working with other organizations to create a fund to address the recent issues and is considering how to resume operations, manage financial losses, and coordinate legal strategies with those affected. LayerZero has not yet made a public statement regarding the freeze initiated by Arbitrum.

If we can freeze more of the stolen money depends on where the attacker sent the rsETH or related assets before combining them, and if other blockchains with similar abilities decide to help by freezing those funds as well.

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2026-04-21 09:14