Ethereum layer-2 blockchain Arbitrum on Monday froze 30,766 Ether (about $71.2 million) held in a wallet linked to the recent exploit of the Kelp protocol. The action was taken by Arbitrum’s 12-member security council, an elected body that said it moved the ETH to “an intermediary frozen wallet” so the funds are no longer accessible to the address that originally held them and can only be moved by further Arbitrum governance action.
Kelp, a liquid restaking protocol, was exploited for at least $293 million on Saturday via its LayerZero-powered bridge. LayerZero has publicly accused North Korean actors of carrying out the attack. The stolen Kelp tokens were then used to borrow assets on the lending platform Aave, creating millions of dollars in “bad debt” across the interconnected crypto lending market.
Arbitrum described the council’s step as “emergency action” and said it acted with input from law enforcement, stressing it “weighed its commitment to the security and integrity of the Arbitrum community without impacting any Arbitrum users or applications.” Griff Green, a member of the Arbitrum Security Council, posted that the decision involved “countless hours of debates, technical, practical, ethical and political.” He said nine of the 12 council members voted to freeze the funds.
The freeze has drawn criticism from some users who argue such interventions undermine decentralization and the core principles of blockchain. Supporters counter that freezing stolen funds can protect users and preserve network integrity. The move highlights an ongoing debate in crypto over how projects should balance decentralization with protective governance measures.