Arbitrum Freezes $71 Million in ETH Linked to Kelp DAO Exploit

Arbitrum has frozen approximately 30,766 Ether valued at about $71.1 million after identifying funds linked to the recent Kelp DAO exploit. The action was carried out by the Arbitrum Security Council, which transferred the assets into an intermediary frozen wallet on the Arbitrum One network.

According to an official update shared on X, the freeze was executed with guidance from law enforcement authorities investigating the incident. Arbitrum stated that the move was designed to secure compromised funds while ensuring that regular users and decentralized applications on the network remained unaffected. The frozen assets will remain locked unless further action is approved through Arbitrum governance procedures.

Kelp DAO Exploit Sparks Security Debate Across Ecosystem

The freeze follows a major security breach involving Kelp DAO’s LayerZero-powered cross-chain bridge, where attackers stole 116,500 rsETH tokens valued at roughly $292 million. Early findings from LayerZero suggested that the attack may be connected to the Lazarus hacking group, which has previously been linked to large-scale crypto thefts.

LayerZero also raised concerns about Kelp DAO’s use of a 1-of-1 decentralized verified network configuration, describing it as a potential single point of failure that lacked sufficient independent verification to detect fraudulent cross-chain messages. In response, Kelp DAO defended its setup, stating that the configuration was originally provided as a default system setting.

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