Arbitrum DAO to unlock $71M frozen ETH from Kelp DAO exploit after vote
Arbitrum DAO is advancing a plan to unlock about $71 million in frozen ETH linked to the Kelp DAO exploit. In a major governance vote, the proposal to recover 30,765 ETH won overwhelming support, with 90.5% of participating voting power approving (173.9M ARB). Only around 9.4% abstained and fewer than 2,000 ARB opposed.
The recovery targets ETH frozen by Arbitrum’s Security Council on April 21, after the attacker moved assets to Arbitrum One. The “DeFi United” effort co-developed the plan (including Aave Labs, Kelp DAO, LayerZero, EtherFi, and Compound). If executed, the frozen ETH would be transferred to a 3-of-4 Gnosis Safe multisig controlled by Aave Labs, Kelp DAO, Certora, and EtherFi.
However, traders should note legal uncertainty. Court filings in the U.S. District Court for the Southern District of New York describe competing claims over the same frozen ETH, with plaintiffs attempting to tie the hack to North Korea’s Lazarus Group and related legal theories.
Even after Arbitrum DAO unlock approval, the recovery may remain incomplete: a reserve deficit of about 76,127 rsETH (≈$174.5M) is still expected. The exploit reportedly drained about 116,500 rsETH (~$292M) from Kelp DAO via a LayerZero-powered bridge on April 18, while DeFi United has pledged roughly 43,000 ETH (~$101M) to contain fallout.
Neutral
The immediate governance result is a positive development for sentiment: Arbitrum DAO has strong backing to unlock a large amount of frozen ETH. This can reduce near-term uncertainty about whether funds will be recovered.
However, the net effect on ETH price is capped. The proposal still leaves a sizable rsETH reserve deficit (~$174.5M), implying incomplete recovery. In addition, U.S. court filings show competing claims over the same frozen ETH, introducing tail risk that the unlock and downstream distribution could be delayed or challenged.
As a result, traders may see a mild relief bounce in the short term, but the combination of an incomplete reserve gap and ongoing legal uncertainty points to a neutral expected price impact.