$457 Million Arbitrum Grant Misuse Scandal Sparks Permanent Bans
Arbitrum's Watchdog Committee has asked holders of $ARB tokens to permanently ban three DeFi projects and their founders from future ArbitrumDAO programs. The committee claims that these projects misused grants from the DAO's legacy incentive rounds.
The affected projects are Good Entry, Limitless, and APX Finance (formerly ApolloX), which received a total of 457,553 $ARB in grant funds. According to the committee, all three cases involve 'high-severity' misconduct, including fabricated deliverables and theft.
Good Entry allegedly used its grant funds to pay 1,032 ineligible users, while Limitless swapped its entire allocation into USDC and bridged it to Base. APX Finance was found to have misused funds in three ways: leaving them unspent in team treasury addresses, making late distributions, and engaging in sybil attacks.
The Watchdog Committee has already recovered about 532,000 $ARB for the DAO and distributed roughly 268,000 $ARB in reporter bounties. The proposal states that each project has until September 10 to argue its case on the forum thread, but if the explanations do not satisfy the committee, three separate Snapshot votes will be held to permanently ban the projects from future ArbitrumDAO programs.