Arbitrum Proposes Bans Over Alleged Grant Misuse

Key Takeaways Proposal targets future DAO program eligibility. Projects can respond until September 10. Three separate Snapshot votes could follow. A ban would not freeze wallets. Identity evidence becomes the central test. The vote would restrict funding, not network access Arbitrum’s Watchdog Committee has proposed permanently excluding Good Entry, Limitless and APX Finance, formerly ApolloX, from future ArbitrumDAO programs. No ban has been approved, and the projects have until September 10 to present their cases. The committee says it will seek votes if their explanations are inadequate and the respective funds are not returned. If that happens, the committee plans to hold three separate Snapshot votes, one for each project. A successful vote would make the relevant project and covered people ineligible for future grants, incentive programs and other DAO-backed opportunities. The measure contains no on-chain action. It would not seize tokens, close smart contracts or stop a wallet from interacting with Arbitrum. Its practical effect would be to block the named recipients from seeking future DAO funding. For a team that closes one product and later returns under another brand, that restriction can matter more than a ban attached only to an inactive protocol name. That funding role is also becoming broader. Robinhood Chain, for example, directs 8% of its protocol net revenue to the ArbitrumDAO treasury, as explained in our analysis of how Robinhood Chain’s activity feeds back into the Arbitrum ecosystem. A successful ban would affect Eligibility for future grants, incentives and other programs funded or administered by ArbitrumDAO. A successful ban would not affect Wallet ownership, token balances, smart-contract deployment or ordinary use of Arbitrum’s public network. The Watchdog was built to recover grants and deter repeat misuse Arbitrum created the Watchdog Program to reward verifiable reports of grant misuse and pursue the recovery of funds. Its framework classifies alleged large-scale and deliberate misuse, including fabricated deliverables or theft, as high severity. As of September 2, the committee said the program had received 90 reports, recovered about 532,000 ARB and distributed roughly 268,000 ARB in reporter bounties. The proposed exclusions would add a longer-term consequence where recovery alone does not settle the issue: a recipient judged to have misused funds could lose access to future DAO support. Three cases, one question about future eligibility The three investigations describe different forms of alleged misuse. The committee’s evidence and the amount at issue in each case are set out below. The committee’s allegations in each case Good Entry 142,839 ARB allegedly distributed to 1,032 ineligible users, alongside suspected team-linked incentive farming. Limitless 75,000 ARB allegedly swapped into USDC and transferred from Arbitrum to Base. APX Finance 239,714 ARB allegedly tied to unreturned funds, delayed distributions and suspected team-linked Sybil activity.