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

Highlights:

• Arbitrum locked $71 million in ETH after tracing the funds to the Kelp DAO exploit.
• The attack occurred on April 18 and resulted in losses of around $292 million.
• The freeze stopped part of the stolen funds, but the wider DeFi damage remains.

Arbitrum froze 30,766 ETH, worth about $71 million, which it linked to the recent Kelp DAO exploit. In an X post on Tuesday, the network said its Security Council used emergency powers to freeze funds held at an Arbitrum One address linked to the attack. Arbitrum added that the action was taken with input from law enforcement and that the frozen assets were moved without affecting other users or the wider chain state.

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How the Kelp DAO Exploit Unfolded

The move followed one of the biggest decentralized finance security incidents of the year. According to Aave’s April 20 incident report, an attacker exploited Kelp’s LayerZero V2 Unichain-to-Ethereum rsETH route on April 18 and released 116,500 rsETH without a matching burn on the source chain.

In simple terms, the system lets extra tokens come out when it should not have. Aave said the attacker then moved the funds through multiple wallets and used some of them to lend on lending platforms, including Arbitrum. The total losses were estimated at around $292 million. Several reports and incident summaries described it as one of the largest DeFi exploits of the year so far

According to Arbitrum, its Security Council stepped in after finding a technical way to secure the ETH on Arbitrum One. The network said it moved the funds to a frozen wallet, where no one can transfer them unless a future on-chain governance vote approves it. Simply put, the attacker can no longer freely use that ETH.

Arbitrum stated:

“As of April 20 11:26pm ET the funds have been successfully transferred to an intermediary frozen wallet. They are no longer accessible to the address that originally held the funds, and can only be moved by further action by Arbitrum governance, which will be coordinated with relevant parties.”

The update gives users some relief after a fast-moving exploit hit several parts of DeFi. Arbitrum did not say how much of the stolen money it may ultimately recover. However, the freeze stops this share of the funds from moving for now. Arbitrum froze about $71 million, so it secured only a portion of the broader losses linked to the Kelp DAO incident.

The Arbitrum Security Council has taken emergency action to freeze the 30,766 ETH being held in the address on Arbitrum One that is connected to the KelpDAO exploit. The Security Council acted with input from law enforcement as to the exploiter’s identity, and, at all times,…

— Arbitrum (@arbitrum) April 21, 2026

Attack Quickly Spread Beyond Kelp DAO

Aave’s report shows that the attack did not stay limited to Kelp DAO. The attacker deposited 89,567 rsETH in total, and opened several of those borrowing positions on Arbitrum. So, the incident was not just a bridge problem. It also created risk for lending platforms, because the attacker used the wrongly released tokens to borrow real assets.

Aave responded on April 18 by freezing rsETH and wrsETH reserves across its V3 markets. It later froze WETH in several deployments, including Arbitrum, to contain further risk. That stopped new supply and new borrowing for those assets. The moves show how one exploit can quickly spread across DeFi.

Arbitrum’s recent freeze does not fix all the damage from the Kelp DAO exploit, but it does block the attacker from using a large amount of ETH right away. For now, the case shows how quickly problems can spread across DeFi. It also shows that chain governance can sometimes step in later to slow the damage.

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