Arbitrum Watchdog Seeks Permanent Bans For Three Grant Recipients

Arbitrum's Watchdog Committee is asking the DAO to bar three former grant recipients and their founders from any future ArbitrumDAO programs after determining the teams misused funds from legacy incentive rounds. The proposal, posted to the governance forum on Sept. 3 by OpCo for the committee, advances punishment from recoveries and clawbacks to permanent exclusion and would trigger individual Snapshot votes if the projects do not satisfactorily respond.

The committee flagged 142,839 ARB tied to Good Entry, 75,000 ARB tied to Limitless and 239,714 ARB linked to APX Finance; together those totals equal 457,553 ARB (about $76,000 at the cited ARB price). The Watchdog — comprising Entropy Advisors, MinistroDolar, the Arbitrum Foundation and OpCo — categorized all three as "high-severity" cases under the program's definitions for deliberate, large-scale misuse such as fabricated deliverables or theft.

The findings differ by project. Good Entry, which received 200,000 ARB under the Short-Term Incentive Program, allegedly routed 142,839 ARB to 1,032 ineligible users and showed signs of self-farming by team-linked wallets; the team is reported to have refused cooperation. Limitless is accused of converting its entire 75,000 ARB LTIPP allocation to USDC and bridging the proceeds to Base, which the committee describes as removing funds from the Arbitrum ecosystem. APX Finance — approved for 525,000 ARB in LTIPP — had 239,714 ARB tied to funds left in team treasuries rather than distributor contracts, late distributions, and a sybil cluster connected to team addresses; APX later merged into Astherus (now Aster).

The Watchdog Program, which the DAO approved in May 2025, reported receiving 90 submissions and, as of Sept. 2, had recovered about 532,000 ARB and paid roughly 268,000 ARB in reporter bounties. Each accused project has until Sept. 10 to post a reply on the governance thread; six days after publication no responses had appeared. If the committee is not satisfied and funds are not returned within a week, three separate Snapshot votes — one per project — would ask ARB holders whether to permanently ban the projects and affiliated contributors from future DAO programs. For projects that have already ceased operations, the proposed ban would apply to the founders only.

The proposal notes there is no on-chain enforcement mechanism; the Snapshot polls would serve as the final determination by the community. APX's successor, Aster, continues operating with significant TVL (reported at $814 million) and large perpetuals volume, much of which sits on BNB Chain, underscoring the challenge of enforcing Arbitrum-specific sanctions against teams or assets that migrate off-chain or to other ecosystems.