Written by Zoltan Vardai , Staff Writer.Reviewed by Bryan O’Shea , Staff Editor.
Written by Zoltan Vardai , Staff Writer.
Reviewed by Bryan O’Shea , Staff Editor.
Recovery hopes fade as Kelp DAO hacker launders nearly all $220M in stolen funds
Latest NewsPublishedJun 1, 2026
Recovery Hopes Fade for Kelp DAO Hack Victims
The Kelp DAO hacker has laundered nearly $220 million in stolen funds, making them almost untraceable. This leaves only $1.7 million remaining in the hacker’s wallet, according to blockchain data. The malicious actor used a two-layer laundering process, bridging to Bitcoin and then returning to Ethereum before withdrawing and depositing via mixing protocol.
This development significantly reduces the chances of recovering the remaining unfrozen funds. An additional $71 million was frozen by Arbitrum’s Security Council, which will be transferred to an Aave-controlled multi-signature wallet for the recovery effort. The next hearing on the ownership claims tied to the frozen funds is set to take place in New York.
Impact on the Crypto Industry
The Kelp DAO hack has triggered wider concerns about the safety of the decentralized finance (DeFi) industry. DeFi protocols are reevaluating the security of their oracle providers, with some migrating to more secure options like Chainlink’s Cross-Chain Interoperability Protocol (CCIP). The $293 million Kelp DAO exploit has prompted a re-examination of security measures, with a focus on preventing similar incidents in the future.
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Kelp DAO Hacker-tagged wallet, total balance. Source: Arkham
The development comes a week after Kelp DAO said it restored its restaked Ether token as part of a five-week recovery effort, after the final tranche of 20,373.7 rsETH tokens was sent to the LayerZero smart contract responsible for locking, minting, burning and releasing rsETH during cross-chain transfers, Cointelegraph reported Tuesday.
Related: Verus bridge exploiter returns $8.5M after bounty offer
Crypto hacks decrease by 90% in May, but DeFi security concerns persist
Cryptocurrency hacks logged a significant decrease during May, but it wasn’t enough to soothe the growing concerns tied to the security of the decentralized finance (DeFi) industry.
Losses from cryptocurrency exploits fell to $68.3 million in May, marking a near 90% decline from the amount lost in April, according to crypto security platform CertiK. About $2.6 million was attributed to phishing attacks, while a total of $9.4 million was successfully recovered or returned.
Crypto exploit losses in May reached $68.3 million. Source: CertiK
Still, the $293 million Kelp DAO exploit triggered wider concerns about the safety of the industry, prompting DeFi protocols to reevaluate the security of their oracle providers.
Within three weeks after the exploit, Bitcoin DeFi platform Solv Protocol and liquidity protocol Tydro both migrated to Chainlink’s Cross-Chain Interoperability Protocol (CCIP), seeking a more secure oracle provider.
Kelp DAO also migrated its rsETH token to Chainlink CCIP, moving away from its previous LayerZero-powered bridge after attributing the incident to weaknesses in its cross-chain setup.
However, LayerZero said on April 20 that the exploit resulted from a single point of failure in Kelp DAO’s implementation, which relied on a single LayerZero DVN as the only verified path despite prior warnings against that configuration.
Magazine: The legal battle over who can claim DeFi’s stolen millions
Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently.
- Scams
- Hacks
- DAO
- DeFi
- Scams & Cybercrime
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