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

A significant portion of the Kelp DAO funds is now immobilized. On Monday night, Arbitrum's Security Council froze approximately $71 million worth of 30,766 ETH, transferring the exploited funds into an intermediary wallet that requires additional governance action for access. This action follows the $292 million rsETH exploit on Saturday. rsETH, a liquid restaking token issued by KelpDAO, represents a user's restaked ether position. The Arbitrum Security Council took emergency action, with law enforcement input, to freeze the ETH held in the address connected to the KelpDAO exploit without affecting 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, which was exploited by attackers who pulled 116,500 rsETH by compromising verifier infrastructure. The stolen funds are no longer controlled by the original address. As a layer-2 blockchain, Arbitrum processes transactions more cheaply and settles them back to the main Ethereum chain. Its Security Council has emergency powers to take protective action, but such interventions on user funds are rare and controversial. The freeze provides Kelp with a partial recovery option, in addition to any further recovery efforts by law enforcement and chain-tracing firms. This development also escalates the dispute between Kelp and LayerZero over responsibility for the exploit, as any broader loss socialization now has a $71 million offset. Kelp is coordinating with ecosystem partners on a recovery fund and considering next steps, while LayerZero has not publicly commented on the Arbitrum freeze. The possibility of freezing more stolen funds depends on the attacker's movements of rsETH or its derivatives and whether other chains with similar emergency powers take action.