A lawyer has appeared in the Arbitrum DAO forums, informing delegates that they cannot release 30,765 ETH frozen after the rsETH exploit, as it is being claimed by victims of North Korean terrorism. The frozen ether was stolen from restaked ETH holders during the April 19 Kelp DAO bridge exploit. The claim is based on a New York restraining notice, which could block Arbitrum from releasing the funds.
The notice was filed on behalf of three sets of judgment creditors with roughly $877 million in claims against North Korea, stemming from incidents such as the 1972 Lod Airport massacre and the 2006 Israel-Hezbollah war. The lawyer argues that the frozen ETH qualifies as North Korean property under U.S. enforcement law, giving the families with unpaid judgments a senior legal claim on the funds. Arbitrum's involvement stems from its Security Council freezing the 30,765 ETH at a specific address on its network.
The legal tool being used is a New York enforcement mechanism that allows creditors to freeze assets by serving a restraining notice. The case has drawn pushback from delegates, who argue that the ETH belongs to the original rsETH depositors and that blocking the recovery effort would shift the cost of North Korea's debt onto a different set of victims.