The Arbitrum Security Council executed an emergency upgrade to freeze 30,766 ETH from an address involved in the KelpDAO exploit. As part of the recovery effort, $71 million in ETH was moved from the exploiter's wallet into a frozen intermediary address. The funds will remain frozen until an Arbitrum DAO vote approves further action.

Council member Patrick McCorry explained that the council briefly modified the chain's inbox contract on L1 to include a function enabling cross-chain messages that could impersonate any sender. Using this capability, a single transaction impersonated the exploiter's address to transfer the funds. Immediately afterward, the inbox contract was restored to its original state.

The Arbitrum DAO will need to decide how to allocate the recovered funds. It will need to determine whether to use them to compensate Aave users for losses or return them to KelpDAO to help restore rsETH backing.

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