Delegates of Arbitrum are currently deliberating whether to release 30,765 ETH, which was frozen following last month's rsETH exploit, into a coordinated recovery effort. However, a lawyer representing victims of North Korean terrorism has intervened, stating that this cannot be done.
The frozen ether was initially drained from restaked ETH holders during the April 19 Kelp DAO bridge exploit, which was reported as the largest DeFi hack of 2026. A governance post authored by attorney Charles Gerstein serves as a restraining notice under New York law on behalf of three sets of judgment creditors holding approximately $877 million in claims against the Democratic People's Republic of Korea.
The claims date back decades, including the 1972 Lod Airport massacre in Israel, the abduction and killing of Reverend Kim Dong Shik in 2000, and the 2006 Israel-Hezbollah war. Although the plaintiffs won their cases, North Korea has never paid, leading the families to search for any North Korean property to collect against to satisfy their judgments. Gerstein's filing argues that because U.S. authorities have linked the Lazarus Group to the North Korean state, the frozen ETH qualifies as North Korean property under U.S.
enforcement law. If the court accepts this, the families with unpaid judgments would have a senior legal claim on the funds, ahead of the rsETH depositors. Arbitrum's involvement stems from its Security Council freezing the 30,765 ETH at a specific address on its network, placing the funds under its control.
The legal tool being used is CPLR §5222(b), a New York enforcement mechanism that allows creditors to freeze assets by serving a restraining notice without first getting a new court order. Once served, the recipient is barred from moving the assets for up to a year or until the judgment is resolved. The complication lies in Arbitrum DAO's unclear legal status, making it uncertain who would be held responsible.
The filing has drawn pushback, with delegate Zeptimus arguing that the ETH is stolen property and does not belong to North Korea, and that blocking the recovery effort would shift the cost of North Korea's debt onto a different set of victims. Delegates were previously weighing the trade-offs of releasing the funds, considering factors such as daily interest costs to Aave users and potential coverage by the Arbitrum Captive Insurance Product.
Gerstein's filing has sharpened the question, leaving delegates to choose between two sets of victims: Aave depositors with stuck positions and families behind decades-old judgments against North Korea.