Arbitrum delegates are deliberating on the release of 30,765 ETH, frozen after the rsETH exploit, as part of a coordinated recovery effort. However, a lawyer representing victims of North Korean terrorism has intervened, stating that the release cannot proceed. The frozen ether was stolen from holders of restaked ETH during the April 19 Kelp DAO bridge exploit, which was reported as the largest DeFi hack of 2026. A governance post by attorney Charles Gerstein serves as a restraining notice under New York law, representing three sets of judgment creditors with approximately $877 million in claims against the Democratic People's Republic of Korea.
The claims date back decades, including the 1972 Lod Airport massacre, the abduction and killing of Reverend Kim Dong Shik in 2000, and the 2006 Israel-Hezbollah war, where a federal judge found North Korea had supplied weapons and training. Although the plaintiffs won their cases, North Korea has never paid, and the families have been searching for any North Korean property to seize. Gerstein's filing argues that the 30,765 ETH frozen by Arbitrum's Security Council qualifies as North Korean property under U.S. enforcement law, given the alleged links between the Lazarus Group and the North Korean state.
If the court accepts this framing, the families with unpaid judgments would have a senior claim on the funds, ahead of the original rsETH depositors. The reason Arbitrum is involved is that its Security Council froze 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 a new court order. The recipient is barred from moving the assets for up to a year or until the judgment is resolved, and ignoring it can lead to contempt of court.
However, the complication lies in Arbitrum DAO's unclear legal status, making it challenging to determine who would be held responsible. The filing has drawn pushback, with some 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 are now faced with a choice between two sets of victims: Aave depositors with stuck positions and families behind decades-old judgments against North Korea.