Arbitrum Freezes $71M ETH Linked to Kelp Hack, Sparks Decentralization Debate

TheNewsCryptoPublished on 2026-04-21Last updated on 2026-04-21

Abstract

Arbitrum, an Ethereum layer-2 blockchain, froze 30,766 ETH (worth over $71.2 million) linked to the recent Kelp protocol exploit. The freeze was executed by a 12-member security council appointed by the Arbitrum community, moving the funds to an intermediary wallet accessible only through further governance action. The hack, which occurred on Saturday, resulted in at least $293 million in losses and was attributed to North Korea by LayerZero. The incident has reignited debates about decentralization, as some critics argue such freezes contradict blockchain’s core principles, while others support them for security. The council reportedly spent hours deliberating the decision, which was approved by 9 of its 12 members.

Arbitrum, the layer-2 blockchain of Ethereum, froze over 30,000 Ether, or over $71.2 million, in a wallet linked to the recent Kelp protocol exploit on Monday.

On Monday, Arbitrum said that a 12-member security committee chosen by the Arbitrum community had taken “emergency action” to seize 30,766 Ether from a wallet linked to the Kelp vulnerability. It went on to say that the original holding address could no longer access the ETH since it had been transferred to “an intermediary frozen wallet”; only further action by Arbitrum governance could restore access to the funds.

On Saturday, the LayerZero-powered bridge of the liquid restaking protocol Kelp was hacked for a minimum of $293 million. LayerZero has since accused North Korea of being responsible for the assault. The attackers borrowed cryptocurrency on the Aave lending platform using stolen Kelp tokens, resulting in millions of dollars’ worth of “bad debt” in the intricate crypto lending market.

Decentralization Debate

Blockchain crypto freezes are a contentious topic in the cryptocurrency industry, with some saying they undermine the technology’s intended use and others saying they improve security and keep networks running smoothly.

Given that the freeze was imposed by a council ordinance, some X users voiced their disapproval of Arbitrum and raised concerns about its decentralization. Arbitrum Security Council member Griff Green wrote on X that the committee deliberated this issue for several hours, debating all aspects of it from a technical to a practical to an ethical and political perspective. Although Green could not provide any further information, but did mention that nine out of the twelve council members decided to freeze the funds.

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Related Questions

QWhat amount of Ether did Arbitrum freeze in connection with the Kelp hack?

AArbitrum froze over 30,000 Ether, which is valued at over $71.2 million.

QWho is accused by LayerZero of being responsible for the Kelp protocol exploit?

ALayerZero has accused North Korea of being responsible for the assault on the Kelp protocol.

QHow did the Arbitrum Security Council make the decision to freeze the funds?

AThe 12-member Arbitrum Security Council deliberated for several hours, and the decision was made by a vote in which nine out of the twelve members agreed to freeze the funds.

QWhy is the freezing of crypto assets a contentious topic in the industry?

ACrypto freezes are contentious because some argue they undermine the technology's intended decentralized and permissionless nature, while others believe they improve security and help keep networks running smoothly.

QWhat was a major consequence of the Kelp hack on the Aave lending platform?

AThe attackers used stolen Kelp tokens to borrow cryptocurrency on Aave, which resulted in millions of dollars' worth of 'bad debt' on the lending platform.

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