Arbitrum Secures $71 Million in Ether Linked to Kelp DAO Breach

A significant portion of the funds stolen from Kelp DAO is now frozen. Arbitrum's Security Council took action on Monday, securing approximately $71 million worth of ether by moving 30,766 ETH into an intermediary wallet. This wallet can only be accessed through additional governance measures. The frozen funds are linked to the $292 million rsETH exploit that occurred on Saturday. rsETH is a token representing a user's position in restaked ether. The Security Council acted with input from law enforcement regarding the exploiter's identity and froze the funds without disrupting any Arbitrum users or applications. The transfer was completed at 11:26 p.m. ET on April 20. This move recovers about a quarter of the total amount drained from Kelp's LayerZero-powered bridge on Saturday. The stolen funds are no longer controlled by the original address. Arbitrum, a layer-2 blockchain, has a Security Council with emergency powers to take protective action in such scenarios. However, governance-level interventions on user funds are rare and controversial. The freeze provides Kelp with a partial recovery option and escalates the dispute between Kelp and LayerZero over responsibility for the exploit. Kelp is coordinating with ecosystem partners on a recovery fund and considering next steps. The ability to freeze more stolen funds depends on the attacker's movements of rsETH and the actions of other chains with similar emergency powers.