Arbitrum Secures $71 Million in Ether Tied to Kelp DAO Exploit

A significant portion of the Kelp DAO funds is now frozen. Arbitrum's Security Council took action on Monday, securing approximately $71 million worth of ETH by transferring 30,766 units to an intermediary wallet. This wallet can only be accessed through additional Arbitrum governance measures. The frozen funds are linked to Saturday's $292 million rsETH exploit. rsETH is a token representing a user's position in restaked ether. The Arbitrum Security Council acted based on law enforcement input regarding the exploiter's identity and froze the funds without impacting any users or applications on the network. 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 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. However, such 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 partners on a recovery fund, while LayerZero has not commented on the Arbitrum freeze. The ability to freeze more stolen funds depends on the attacker's movements of rsETH or its derivatives and whether other chains take similar action.