Arbitrum Freezes $71M ETH in KelpDAO Exploit Aftermath
On April 18, an attack on LayerZero's infrastructure resulted in a $290 million $rsETH drain from Kelp DAO. The exploit, leveraging compromised LayerZero RPC nodes and a single-verifier setup, enabled attackers to mint 116,500 unbacked $rsETH across 20 chains, used as Aave collateral to borrow real $ETH.
The Arbitrum Security Council responded with an emergency freeze of 30,766 $ETH ($71 million) linked to the exploit, transferring assets to a dedicated recovery wallet.
Post-freeze, the exploiter moved $175 million off the Ethereum network, then laundered approximately 34,500 $ETH ($80 million) primarily via THORChain.
This laundering activity surged THORChain's network metrics: 24-hour volume hit $360 million (from $20M average), and transaction fees totaled $420,000 (from $5K average). $RUNE, THORChain's native token, rose 16.5% in 24 hours and 23.4% over seven days.
The exploit impacted Aave, where attackers deposited $rsETH and borrowed WETH. Aave saw $15.1 billion in withdrawals over 3.5 days, reducing deposits from $48.5 billion to $30.7 billion. Its Total Value Locked (TVL) dropped over $10 billion (from $36B to under $17B since mid-January), and weekly protocol revenue plunged 62%. Aave's bad debt proposals include socializing losses across all $rsETH holders (which would result in an approximate 15.12% loss per $rsETH) or L2 $rsETH bearing losses (which would entail a 73.54% devaluation), totaling an estimated $230.1 million in bad debt. Separately, SparkLend recorded $1.4 billion in inflows during Aave's outflows.
Sun Sues World Liberty Financial Over Frozen $WLFI Tokens
Justin Sun, founder of the $TRON blockchain, filed a California federal lawsuit against World Liberty Financial, a crypto project reportedly linked to the Trump family.
The lawsuit alleges World Liberty Financial unjustly froze Sun's $WLFI tokens, removing governance rights, and threatened to destroy his holdings. Sun claims his initial $WLFI investment was fraudulent and that he sought private resolution. The suit also targets an April 15 governance proposal, which Sun opposes, citing his concern that it would lock tokens unless users accept new terms.
The lawsuit coincided with a downturn for the $WLFI token, trading at $0.08, an 80% decrease from launch highs. Social platform sentiment scores of -80 to -96 indicate a highly bearish market reaction.
Moonbixc Protocol Flagged as Active Scam, Draining Wallets
The Moonbixc protocol is identified as an active cryptocurrency scam, reportedly draining user wallets of Ethereum ($ETH) and Tether ($USDT).