Ethereum layer-2 blockchain Arbitrum has frozen over 30,000 Ether, valued at approximately $71.2 million. The funds are linked to a recent exploit of the Kelp protocol.
Arbitrum's security council, a 12-member elected body, took this "emergency action" to move the Ether to a frozen wallet. These funds are now inaccessible and can only be moved by further Arbitrum governance.
The Kelp protocol, a liquid restaking platform, was reportedly hacked for at least $293 million. LayerZero has accused North Korea of orchestrating the attack.
This exploit has created significant "bad debt" in the crypto lending market. Attackers allegedly used stolen Kelp tokens to borrow other cryptocurrencies from platforms like Aave.
The decision by Arbitrum to freeze assets has been met with mixed reactions. Critics question the measure's impact on decentralization, while supporters view it as a necessary security enhancement.