Reading Time: 3 minutesKey Takeaways:

Arbitrum used its emergency powers to freeze 30,766 ETH linked to the KelpDAO hack.
The funds were moved to a frozen intermediate wallet that the hacker can no longer access.
The stolen money can only be moved again if the Arbitrum community votes on it.
This recovery covers about 25% of the total $290 million lost in the KelpDAO bridge exploit.

Moving quickly to secure a massive recovery, the Arbitrum Security Council has successfully frozen 30,766 ETH (worth $71 million) stolen in the KelpDAO hack, placing the funds into a locked wallet that can be opened after a community governance vote.

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

The KelpDAO Bridge Exploit
KelpDAO was exploited for about $290 million. The hacker attacked a bridge using LayerZero technology by tricking a verifier to send a fake message. This allowed the hacker to create 116,500 rsETH tokens without any actual collateral and then withdraw them as real ETH.
The rsETH markets on Aave V3 and Aave V4 have been frozen
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How Arbitrum Outran the Hacker
To save the stolen funds, the Arbitrum Security Council took a rare and bold action. They used their emergency powers to step in before the hacker could move the money off the Arbitrum network. The Council sent a fake message similar to the one the hacker would use, but instead of sending the money to the hacker’s wallet, they directed the 30,766 ETH to a special intermediate wallet. This wallet is now locked, meaning the $71 million is safe but currently unmovable.
Arbitrum moved the entire 30,766 ETH from the hacker’s wallet to a secured address
The decision to freeze $71 million has started a debate in the crypto world. On one hand, many people are happy because it prevents a huge loss for victims and helps DeFi platforms like Aave stay stable. On the other hand, some worry that if a Council can freeze money, the network isn’t truly decentralized or permissionless.
The truth is that in 2026, the market is choosing safety over perfect decentralization. For users and big companies to trust crypto, there must be a way to stop thieves. While it feels a bit like a traditional bank, this safety net might be exactly what is needed for the next billion users to join. If the community votes to return the money to victims, it will prove that governance can be a powerful tool for justice.
The Next Steps for KelpDAO Victims
30,766 ETH is sitting on the Arbitrum network, but it is frozen. It can’t be used until a formal governance proposal is passed by Arbitrum token holders. KelpDAO announced that it is working with authorities and the community to build a plan to return this money to the people who lost funds. This recovery is proving that technology can sometimes fix its own mistakes.
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