$71 Million in Ether Linked to Kelp Hack Frozen by Arbitrum
According to Arbitrum security council member Griff Green, the decision was made in collaboration with law enforcement authorities and followed extensive deliberation.
On Monday, Arbitrum, a layer-2 blockchain operating on Ethereum, implemented a freeze on over 30,000 Ether valued at approximately $71.2 million that was stored in a wallet linked to the Kelp protocol security breach.
In an announcement made Monday, Arbitrum revealed that its 12-member security council, which is elected by members of the Arbitrum community, executed "emergency action" to immobilize 30,766 Ether (ETH) contained within a wallet associated with the Kelp security incident.
The blockchain network further explained that the ETH has been transferred to "an intermediary frozen wallet" and is "no longer accessible to the address that originally held the funds, and can only be moved by further action by Arbitrum governance."
On Saturday, Kelp, which operates as a liquid restaking protocol, suffered a security breach resulting in losses of at least $293 million through its bridge powered by LayerZero, with LayerZero pointing the finger at North Korea as the perpetrator behind the attack.
The security breach has resulted in millions of dollars in "bad debt" across the tightly interconnected cryptocurrency lending ecosystem, as the malicious actors leveraged stolen Kelp tokens as collateral to borrow various cryptocurrencies through the Aave lending platform.
The act of freezing cryptocurrency on a blockchain network remains a contentious issue within the crypto community, with critics of such freezes contending that this type of intervention contradicts the fundamental purpose of blockchain technology, while proponents maintain it strengthens security measures and preserves a network's integrity.
Numerous users on X expressed criticism toward Arbitrum regarding the freeze and raised questions about the platform's level of decentralization given that funds were immobilized through a council's directive.
In a post on X, Griff Green, who serves on the Arbitrum Security Council, stated that the group "did not make this decision lightly, there were countless hours of debates, technical, practical, ethical and political."
Green went on to reveal that nine out of the 12 council members cast votes in favor of freezing the funds, though he did not provide additional details.
According to Arbitrum's statement, its council took action after consulting with law enforcement and "weighed its commitment to the security and integrity of the Arbitrum community without impacting any Arbitrum users or applications."