Arbitrum Freezes $71 Million in ETH After KelpDAO Exploit

Arbitrum's Security Council has frozen 30,766 ETH, approximately $71 million, following a major exploit at decentralized finance protocol KelpDAO. The funds were transferred to an intermediary frozen wallet on April 20.

The council's action, taken with input from law enforcement, ensured no other users or chain states were impacted. The frozen ETH can only be moved by further Arbitrum governance action.

The freeze comes after KelpDAO lost roughly $292 million on April 18, marking 2026's largest DeFi security breach. The attack exploited a vulnerability in LayerZero's cross-chain messaging system, allowing the theft of 116,500 rsETH tokens.

The exploit caused significant contagion. When rsETH's price collapsed, lending markets like Aave experienced severe liquidity crunches and accumulated bad debt, with total value locked on Aave dropping by $6.6 billion.