Authors: Binance
Proposal Type: Constitutional AIP
Abstract
This proposal asks the ArbitrumDAO to approve the release of the 8,425.997 ETH and 74,559,805.2 ARB currently immobilized on Arbitrum One. The funds were frozen by the Arbitrum Security Council as part of a wider ecosystem effort to halt the theft of funds due to the exploit of Binance’s hot wallet. The released funds will be returned to Binance, from whose wallet they were stolen, and applied as described under “Use of Funds” to help make affected Binance users whole.
Motivation
On 29th October 2026, the Arbitrum Security Council froze 8,425.997 ETH and 74,559,805.2 ARB held by the exploiter on Arbitrum One and moved the funds to 0x0000000000000000000000000000000000000DA0. This action by the Security Council, which was acting in a true security emergency situation, was part of a wider ecosystem effort that has frozen over $3bn.
While Binance is committed to covering all losses from the SAFU Fund and the company’s treasury, we want to take this opportunity to work with Arbitrum Governance and recover the funds frozen by the Arbitrum Security Council. We are aware this involves going through the full governance process and may take approximately seven weeks or longer to complete.
This proposal will return the frozen funds to Binance and will be applied as described under “Use of Funds” below.
Rationale
Arbitrum has publicly stated that a governance action from the DAO is required to release the funds. This proposal seeks to start the process for a governance action to take place and for the funds to be returned to Binance. This is to aid the recovery process and help many users of the Arbitrum community, including the wider crypto ecosystem, who are impacted by the Binance exploit.
Key Terms
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Frozen address: 0x0000000000000000000000000000000000000DA0
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Recovery address: 0xd9fd39103674cb061d64d9c3b73b878dbe610b80
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Recovered amount: 8,425.997 ETH and 74,559,805.2 ARB
Specifications
This Constitutional AIP proposes the release of 8,425.997 ETH and 74,559,805.2 ARB, the full frozen balance currently held at the frozen address to Binance’s recovery address.
Recovery requires ArbitrumDAO to take an on-chain action similar to the action performed by the Security Council. It is an atomic action that has three steps:
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Upgrade the Inbox contract on Ethereum to add a temporary function (sendUnsignedTransactionOverride)
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Issue a transaction that recovers the funds from the frozen address,
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Upgrade the Inbox contract again to remove the temporary function.
Use of Funds
The Frozen Assets (as defined under “Indemnification”) are being returned to Binance from whose wallets they were stolen. Binance has committed to cover affected users’ losses from the SAFU Fund and its treasury. To the extent it has done so, Binance may be entitled to the rights of those users in respect of the misappropriated assets, and the returned assets will be applied to the losses and costs arising from this incident, including replenishing the SAFU Fund or treasury reserves used for that purpose.
Third-Party Claims and Legal Process
Binance represents that the Frozen Assets are traceable to assets stolen from wallets owned or controlled by Binance on 29 October 2026, that immediately before the exploit those assets were owned by Binance or held by it for its users, and that, to Binance’s knowledge, no other person has any interest in them.
Third parties have previously asserted claims to assets immobilized on Arbitrum One on the theory that those assets belong to persons alleged to be responsible for an exploit. Accordingly:
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This proposal will not be submitted on-chain, and the Delivery (as defined under “Indemnification”) will not be made, while any restraining notice, writ, order or other legal process prohibiting or restraining the transfer of the Frozen Assets is in effect, unless a court of competent jurisdiction has modified or vacated that process to permit the on-chain vote and the Delivery. Binance will, at its own expense, seek any such modification or vacatur.
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Binance agrees (i) to be bound by any such legal process as if it had been served directly on Binance, (ii) to hold the delivered assets at the designated recovery address, without transfer or commingling, until any such process is vacated or finally resolved, (iii) at its own expense, to defend any claim to the Frozen Assets, and (iv) to turn over the delivered assets, or their value, to any person that a court of competent jurisdiction finally determines is entitled to them.
Nothing in this proposal requires The Arbitrum Foundation, the Security Council, any delegate or any other person to take any action that would violate applicable law or any legal process. None of them has any beneficial interest in the Frozen Assets. Nothing in this proposal is, or shall be construed as, a submission by any of them to the jurisdiction of any court or other tribunal, or a concession that any legal process is valid or binding on any of them or on the Frozen Assets.
Steps to Implement
First, a Snapshot temperature check will be held after forum discussion.
Second, before on-chain submission, Binance will complete the updates described under “Specifications” and enter into the Indemnification Agreements described under “Indemnification”.
Third, subject to “Third-Party Claims and Legal Process,” the proposal will proceed through Arbitrum’s Constitutional AIP lifecycle, including the applicable waiting periods, message finalization, and final execution.
Timeline
We anticipate the entire process will take around 49 days including 1 week for forum discussion, 1 week temperature check vote, 2 week on-chain vote, and then around 18 days from the vote concluding until the final transaction payload executes that returns the funds to Binance. This timeline may be extended if any legal process affecting the Frozen Assets must first be resolved (see “Third-Party Claims and Legal Process”).
Overall Cost
No new treasury allocation is requested.
This proposal concerns the release of ARB and ETH already frozen on Arbitrum One in connection with the exploit. The direct budgetary cost to Arbitrum DAO is therefore expected to be zero outside of normal governance execution overhead.
Requested Feedback
Binance requests feedback on whether ARB tokenholders support the release of the Frozen Assets to Binance on the terms described above.
Conflict of Interest Disclosure
Binance is submitting this proposal because we are affected by this incident and the funds will aid the recovery process for our users.
Indemnification
As a condition of the requested release and as a condition precedent to the Delivery (as defined below), Nest Exchange Limited, Nest Clearing and Custody Limited and Nest Trading Limited, together with their affiliates, subsidiaries and successors-in-interest (collectively, “Binance”), jointly and severally agree to unconditionally indemnify, defend, and hold harmless The Arbitrum Foundation, Offchain Labs, Inc., the Arbitrum Security Council and each member thereof and each of their officers, directors, agents, employees, advisors, contractors, representatives, and successors (each, an “Indemnified Party”) from and against any and all claims (including any claims brought by tokenholders, DAO participants, counterparties, or governmental authorities from any jurisdiction), regulatory inquiries, actions, demands, proceedings, losses, damages, fees, lost profit, tax, reduction in value, liabilities, costs, and expenses (including reasonable fees and expenses of lawyers, accountants, auditors, experts and other professionals), known and unknown claims, whether in contract, tort, criminal (to the fullest extent permitted by applicable law), or otherwise, directly or indirectly arising out of, arising from, resulting from or in connection with (1) the Arbitrum Security Council’s action to freeze the 8,425 ETH and 74,559,805.2 ARB being held in the address on Arbitrum One that was connected to the Binance exploit at the time of such action and its movement to a new address (“Frozen Assets”), (2) the release and movement of the Frozen Assets to the designated recovery address pursuant to this proposal (the “Delivery”), (3) any and all actions of an Indemnified Party in furtherance of the actions described in clauses (1) and (2), and (4) any delay in, suspension of or refusal to make the Delivery, and any compliance by an Indemnified Party with any order, restraining notice, writ or other legal process relating to the Frozen Assets (including any transfer of all or part of the Frozen Assets to any person other than the designated recovery address pursuant to such process), in each case including enforcement actions, penalties, and reasonable defense costs related thereto (such amounts, collectively, “Indemnifiable Expenses”).
Before this proposal is submitted on-chain Binance shall promptly enter into a customary Indemnification Agreement with each of the Arbitrum Foundation, Offchain Labs, Inc., and each member of the Arbitrum Security Council, which shall memorialize the terms set forth herein and shall further provide: (1) for advancement of all Indemnifiable Expenses within five business days of written request, (2) for contribution in the event that indemnification is unavailable to an Indemnified Party for any reason whatsoever, (3) that Binance is the indemnitor of first resort (i.e., its obligations to the Indemnified Party are primary and any obligation of a third party to advance expenses or to provide indemnification for the Indemnifiable Expenses are secondary), (4) that each Indemnified Party shall have the right in its sole discretion to conduct the defense of and to settle or resolve any such claim, which shall be included as Indemnifiable Expenses; however, (i) Binance shall have the right to initial notice from and reasonable consultation with the Indemnified Party on the status of any such claim, and (ii) Binance shall have the right to advance notice of, and consent to, any resolution of such claim, which consent shall not be unreasonably withheld, (5) that this indemnification shall survive indefinitely and shall not be limited by the completion of the actions contemplated herein, the termination of this proposal, or the resignation or removal of any Indemnified Party, (6) that the indemnification obligations shall not be subject to any cap, basket, deductible, or limitation (either individually or in the aggregate with respect to the Indemnified Parties), (7) that indemnification shall apply to the fullest extent permitted by law, including claims alleging negligence, gross negligence, or breach of fiduciary duty (but excluding willful misconduct or fraud), (8) all amounts payable by Binance under or in connection with the Indemnification Agreement shall be paid in full without any set-off or counterclaim and free and clear of any deductions or withholdings for any and all present or future taxes, levies, imposts, duties, charges, fees, deductions, or withholdings of any nature imposed by any governmental authority to the maximum extent allowed by applicable law; provided, however that such payments shall include any “gross up” that may be necessary to ensure that the Indemnified Party is economically whole on an after tax basis, (9) the rights of the Indemnified Parties pursuant to the Indemnification Agreement shall apply irrespective of, and shall not be reduced by, any insurance maintained by an Indemnified Party or any third party indemnitor, and (10) that the Indemnification Agreements contemplated herein shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of laws principles, and in the case of any dispute resolution relating to this Agreement, Binance hereby submits to the exclusive jurisdiction of the state and federal courts located in New York County, New York for such dispute resolution process, (11) solely with respect to The Arbitrum Foundation’s Indemnification Agreement, that Binance shall reimburse the Arbitrum Foundation for any Indemnifiable Expenses incurred as a result of payment from The Arbitrum Captive Insurance Product (as further detailed at https://docs.arbitrum.foundation/assets/ArbitrumFoundationCaptiveInsuranceProduct.pdf) to ArbitrumDAO delegates as if such ArbitrumDAO delegate was an Indemnified Party and (12) the Indemnified Parties shall represent and warrant in their applicable Indemnification Agreement that, to their actual knowledge, they have not paid or become obligated to pay any cash amounts constituting Indemnifiable Expenses (other than fees and expenses of lawyers and other legal advisors) prior to the date of the first publication of this proposal that they intend to seek indemnification for pursuant to their Indemnification Agreement.