Arbitrum delegates are currently deliberating whether to release the frozen 30,765 ETH into a coordinated recovery effort, but a lawyer representing victims of North Korean terrorism has intervened, stating that this cannot be done. The ether in question was stolen from restaked ETH holders during the April 19 Kelp DAO bridge exploit, which was previously 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 North 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 that North Korea had supplied weapons and training used in rocket attacks. The plaintiffs won their cases, but North Korea has never paid, and the families have been searching for any North Korean property they can legally claim to satisfy their judgments.
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, responsible for the exploit, and the North Korean state. If the court accepts this argument, the families with unpaid judgments would have a senior legal claim on the funds, ahead of the rsETH depositors.
Arbitrum is involved because its Security Council froze the 30,765 ETH at a specific address on its network, effectively 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 obtaining a new court order, although the target can challenge it afterward.
The complication arises from the fact that Arbitrum DAO is not a company with clear legal status, making it unclear who would be responsible if a court ultimately decides that someone has control over the frozen ETH. The filing and legal theory have drawn pushback, with delegate Zeptimus arguing that the legal premise is backwards, stating that the ETH is not property in which North Korea has an interest, but rather stolen property, and that under basic property law, a thief acquires no title. In this view, the funds belong to the original rsETH depositors, and the proposed recovery effort is not a redistribution but a return of assets to their rightful owners.
Delegates had been working through a different set of considerations, but Gerstein's filing has sharpened the question, particularly with regards to coverage for delegate liability. Ultimately, the decision comes down to a choice between victims: Aave depositors with stuck positions, or families behind decades-old judgments against North Korea, still seeking to collect.