Arbitrum Backs $71M Kelp ETH Release

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Arbitrum delegates backed the release of roughly $71 million in Ether frozen after the Kelp DAO exploit, moving the DeFi recovery effort closer to restoring part of rsETH’s backing.

The Snapshot vote passed with 90.96% support. About 9.4%, or 18.1 million ARB, abstained, while less than 1% voted against the proposal.

Snapshot Vote Backs Release of 30,765 ETH

The proposal would unfreeze 30,765 ETH that Arbitrum’s Security Council froze on April 21 after the Kelp DAO exploit. The funds were linked to the attacker and placed under DAO control while governance decided how they should be handled.

The April exploit drained about 116,500 rsETH from Kelp DAO, worth roughly $290 million to $293 million at the time. The attack later spread into lending markets after stolen or unbacked rsETH was used as collateral across DeFi protocols.

30,765 ETH Would Move to DeFi United Recovery

The motion was co-authored by Aave Labs, Kelp DAO, LayerZero, EtherFi and Compound. If approved through Arbitrum’s full governance process, the frozen ETH would be transferred to a recovery multisig tied to the broader DeFi United effort.

DeFi United was created after the Kelp exploit to limit contagion and help restore rsETH’s economic backing. Contributors including Mantle, EtherFi Foundation, Golem Foundation, Lido DAO, Ethena, LayerZero, Ink Foundation and Tydro have pledged a combined 43,000 ETH, worth about $101 million.

Tally Vote Still Needed After Snapshot Approval

The Snapshot result is not binding and does not automatically release the ETH. The proposal still needs to pass a formal on-chain governance vote through Tally before the funds can be transferred into the recovery process.

That step is required because the ETH was frozen through an emergency Security Council action. The DAO must now formally approve the transfer before the assets can be used in the recovery plan.

Court Allows Transfer Despite Unresolved Legal Claim

A U.S. court has allowed the transfer process to move forward, although the legal claim over the ETH remains unresolved. Lawyers representing plaintiffs with unpaid judgments against North Korea have argued that the frozen ETH may be tied to DPRK-backed actors and should be held to satisfy those judgments.

For Kelp DAO and affected DeFi protocols, the Arbitrum vote is still a major step. If the on-chain vote passes, the 30,765 ETH could become one of the largest contributions to the rsETH recovery effort, even as the competing legal claim remains active.