Arbitrum freeze sparks decentralisation debate after hack

The Arbitrum Security Council intervened to freeze more than 30,000 ETH, worth about $71 million, linked to the KelpDAO exploit.

The emergency action prevented the attacker from moving funds but raised concerns over whether a small elected group can override transactions in a supposedly decentralised system.

“The default was do nothing,”

Said Steven Goldfeder.

The intervention involved transferring funds from the attacker’s address into a wallet with no owner, effectively locking them and buying time for further governance decisions.

Supporters argued the move demonstrated a necessary security mechanism, while critics said it undermines the principle that blockchain transactions should be immutable and beyond human intervention.

Patrick McCorry said the Security Council is transparent and elected by token holders, positioning it as a community-mandated safeguard rather than a central authority.

The incident has intensified debate over the balance between decentralisation and security on Layer 2 networks, with questions growing around governance, precedent and who ultimately controls blockchain systems.

At the time of reporting, Ethereum price was $2,323.50.