Three DeFi projects face possible Arbitrum DAO ban votes

Arbitrum’s Watchdog Committee set a tentative Sept. 10 deadline for Good Entry, Limitless and APX Finance to respond to high-severity findings and return disputed ARB tokens. If a project’s explanation is unsatisfactory or funds are not returned, the committee may hold separate off-chain Snapshot votes to seek social consensus on barring each project from future Arbitrum DAO programs.

The committee reported that Good Entry distributed 142,839 ARB to 1,032 users deemed ineligible during and after the Short-Term Incentives Program. Analysis also flagged self-farming by wallets linked to team addresses. Good Entry had requested 200,000 ARB in its grant application; the watchdog described the 142,839 ARB as part of that distribution rather than an outstanding repayable balance.

Limitless is alleged to have converted 75,000 ARB into USDC and transferred the funds to Base. The committee noted it was unable to reach project members to clarify the transfers. The 75,000 ARB figure matches the amount Limitless sought in its LTIPP application.

APX Finance, formerly ApolloX, is tied to 239,714 ARB across overlapping issues that include a substantial unused portion in treasury addresses, late transfers to distributor contracts and alleged Sybil activity linked to team members. APX requested 525,000 ARB in its application; the committee did not break down the 239,714 ARB across the individual findings.

The three cases total 457,553 ARB when combined, but the committee emphasized that number aggregates separate findings and does not represent a single recoverable balance. Each case would be handled independently and could lead to its own Snapshot vote.

Any off-chain vote would seek to make the project or its people ineligible for future Arbitrum DAO programs. For active projects the proposed ban would apply to founders, current team members and affiliated contributors; for inactive projects it would cover founders only. The committee clarified the proposed sanction would restrict governance access and would not execute wallet freezes or disable protocols.

As of Sept. 5 no responses from the three projects appeared in the proposal thread and no bans have been approved. The watchdog also reported that, as of Sept. 2, the program had received 90 reports, recovered about 532,000 ARB and paid roughly 268,000 ARB in reporter bounties. The committee’s next steps depend on whether the projects respond before the Sept. 10 deadline and whether it proceeds with the tentative Snapshot schedule.