Arbitrum watchdog seeks permanent ban for three grant abuse cases

Arbitrum’s Watchdog Committee has proposed permanently excluding three DeFi projects from future DAO programs after flagging cases involving 457,553 ARB, valued at roughly $76,000. Summary Good Entry, Limitless, and APX Finance face separate permanent-ban votes. The committee identified alleged misuse involving a combined 457,553 ARB. Projects have until Sep. 10 to respond and return any disputed funds. Any ban would restrict future DAO participation without freezing wallets or protocols. Arbitrum grant cases involve three different findings The Sep. 3 governance proposal said Good Entry, Limitless, and APX Finance, formerly ApolloX, had been linked to what the Watchdog Committee classified as high-severity misuse of DAO funds. According to the committee, high-severity cases involve large and deliberate misuse of money allocated by ArbitrumDAO. Examples can include fabricated work and theft, although the findings differ across the three projects under review. The cited amounts add up to 457,553 ARB, worth about $76,000 at the valuation used in the proposal’s coverage. However, the total does not represent one confirmed theft or a single balance owed to ArbitrumDAO. It combines separate findings involving distributions to ineligible accounts, funds moved away from Arbitrum, and grant tokens that were allegedly left unused or distributed late. You might also like: Arbitrum co-founder defends Robinhood’s 90% fee share Good Entry received 200,000 ARB through the first round of Arbitrum’s Short-Term Incentives Program. On-chain analysis reviewed by the committee found that 142,839 ARB went to 1,032 users deemed ineligible during and after the incentive period. Wallets connected to the Good Entry team also showed signs of self-farming, according to the proposal. When investigators sought an explanation, the committee said the project refused to cooperate. Good Entry has since stopped operating, so any approved ban would apply to its founders rather than an active team. Arbitrum has used community funding for several years to attract users and developers. In November 2023, three funding programs allocated a combined 500,000 ARB through retroactive funding, matching grants and prizes for grant-related tools. Limitless allegedly moved its entire grant to Base Limitless faces a separate finding tied to the Long-Term Incentives Pilot Program. The project received 75,000 ARB but later exchanged the full grant for the USDC stablecoin and transferred the funds to Base, according to the Watchdog Committee. Investigators classified the case as suspected theft because the conversion and cross-chain transfer removed all the grant money from the Arbitrum ecosystem. The committee said it could not contact any Limitless team members for an explanation or to recover the funds. Limitless also appears to have stopped operating since its participation in the incentive program. Under the proposed enforcement policy, a permanent ban would therefore apply to its founders. The committee has not said that transferring assets to another blockchain is automatically improper.