Arbitrum’s Watchdog Committee has asked ARB holders to permanently exclude three DeFi projects and their founders from all future ArbitrumDAO programs after alleging serious misuse of past incentive grants.

The proposal targets Good Entry, Limitless and APX Finance, formerly ApolloX, and marks an escalation from trying to recover funds to seeking lasting exclusion from DAO-backed initiatives. The committee said the cases involve 457,553 ARB in questioned grants, worth about $76,000 at the current ARB price.

Grant misuse case expands beyond clawbacks

According to the committee’s findings, the move would create a DAO-level blacklist designed to survive even if the protocols themselves no longer operate. The proposed restriction would also apply to founders, not just the projects’ brands or smart contracts.

The source article said two of the three targeted projects had already ceased operating in 2024, while the third, APX Finance, later merged into Aster. The committee is nevertheless seeking a broader ban that would carry over into any future ArbitrumDAO program.

How the committee described each case

For Good Entry, the committee said the project received 200,000 ARB through STIP. Its on-chain review found 142,839 ARB had gone to 1,032 users deemed ineligible, and it said wallet activity suggested self-farming by addresses tied to the team. The committee also said the team did not cooperate with the review.

In Limitless’s case, the committee flagged the full 75,000 ARB LTIPP allocation. It said the tokens were swapped into USDC and bridged to Base, conduct it described as suspected theft.

For APX Finance, the committee identified 239,714 ARB tied to issues within a 525,000 ARB LTIPP allocation. Its findings cited funds left in team wallets, delayed distributions, and sybil activity linked to team-connected addresses. APX later merged with Astherus to form Aster, according to the source article.

Aster connection adds practical complexity

The APX case stands out because the protocol’s assets were acquired and continued under the Aster brand. The source article said Aster carries substantial total value locked and user activity, meaning the enforcement discussion now reaches beyond a defunct grant recipient and into a live successor brand.

Even so, the proposed bans are aimed at participation in ArbitrumDAO programs rather than an on-chain shutdown. The article noted there is no smart-contract or protocol-level enforcement mechanism attached to the measure.

Response deadline and next steps

All three projects have until Sept. 10 to respond in the forum thread. The committee said that if the explanations do not satisfy reviewers and the questioned funds are not returned within the following week, the matter would move to token holders.

At that stage, ARB holders would vote in three separate Snapshot polls on whether Good Entry, Limitless and APX Finance, along with their founders, should be permanently barred from future ArbitrumDAO programs. Those votes would determine whether the committee’s requested exclusions are adopted.

Source: thedefiant.io