Arbitrum delegates are considering whether to release 30,765 ETH frozen after the rsETH exploit into a recovery effort, but a lawyer for victims of North Korean terrorism has intervened, claiming the funds should be used to satisfy decades-old judgments against the Democratic People's Republic of Korea. The lawyer, Charles Gerstein, has filed a restraining notice under New York law on behalf of three sets of judgment creditors with claims totaling approximately $877 million. The claims stem from various incidents, including the 1972 Lod Airport massacre, the abduction and killing of Reverend Kim Dong Shik in 2000, and the 2006 Israel-Hezbollah war. The plaintiffs won their cases, but North Korea has never paid, and the families have been searching for sovereign assets to seize.
Gerstein's filing argues that the frozen ETH qualifies as North Korean property under U.S. enforcement law due to the alleged links between the Lazarus Group, responsible for the exploit, and the North Korean state.
If the court accepts this framing, the families would have a senior claim on the funds, ahead of the original rsETH depositors. The legal tool used is a New York enforcement mechanism that allows creditors to freeze assets by serving a restraining notice, without first obtaining a new court order.
The notice bars the recipient 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 uncertain who would be held responsible if the notice is ignored.
The filing has drawn pushback, with some arguing that the ETH is stolen property and belongs to the original depositors, and that blocking the recovery effort would shift the cost of North Korea's debt onto a different set of victims.