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Kelp DAO says rsETH has been restored operationally five weeks after a $293 million exploit, marking the clearest recovery step since the April 18 attack.
In a post on X, Kelp said the final tranche of 20,373.72 rsETH had been sent to the rsETH OFT adapter. The LayerZero-linked smart contract is used to lock, mint, burn and release rsETH during cross-chain transfers. Kelp said the transfer “closes the operational part” of its recovery plan.
Lazarus-Linked Exploit Stole 116,500 rsETH
The April attack was one of the largest DeFi exploits reported in 2026. Chainalysis said attackers linked to North Korea’s Lazarus Group stole about 116,500 rsETH, worth roughly $292 million, by abusing off-chain verification infrastructure tied to Kelp DAO’s LayerZero bridge setup.
Chainalysis said the attack was not a smart contract bug in Kelp or LayerZero itself. Instead, the attackers compromised the verification path and caused funds to be released against a false burn event. That distinction matters because the exploit exposed weakness around cross-chain verification rather than the core rsETH token design.
Aave Was Left With $190M in Bad Debt
The damage spread beyond Kelp because the attacker used a large portion of the stolen rsETH as collateral on lending protocols. Aave was among the platforms hit hardest by the incident.
The attacker borrowed wrapped Ether against the rsETH and left about $190 million in bad debt. The incident triggered liquidity stress across DeFi and renewed concern about how quickly bridge failures can spill into lending markets.
20,373 rsETH Tranche Closes Recovery
Kelp’s recovery was supported by DeFi United, a coalition formed after the hack to recapitalize rsETH and limit losses across affected protocols. The first tranche of 25,000 rsETH was transferred on May 13, allowing rsETH bridging between Ethereum mainnet and layer-2 networks to resume.
Kelp later reopened withdrawals and said minting, redemptions and rewards had resumed normal operation before the final 20,373.72 rsETH transfer completed the operational leg of the plan.
Frozen 30,765 ETH Dispute Remains Unresolved
Kelp’s latest update does not mean every issue tied to the exploit is resolved. Legal disputes around about 30,765 ETH in frozen funds remain unresolved, along with recovery accounting and questions over responsibility for the bridge setup.
Still, from a user and protocol-operations perspective, Kelp’s update is the strongest sign so far that rsETH has been brought back into working condition after one of the year’s biggest DeFi shocks.
