Arbitrum delegates are currently deliberating on whether to release 30,765 ETH that was frozen after last month's 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 ether in question was stolen from holders of restaked ETH during the April 19 Kelp DAO bridge exploit, which was previously reported as the largest DeFi hack of 2026. A governance post by attorney Charles Gerstein serves as a restraining notice under New York law on behalf of three sets of judgment creditors with approximately $877 million in claims against the Democratic People's Republic of Korea.
These 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 the damages. With sovereign assets being virtually impossible to seize, the families have spent years searching for any North Korean property that can be legally claimed to satisfy their judgments.
Gerstein's filing argues that since U.S. authorities have linked the Lazarus Group, responsible for the exploit, to the North Korean state, the frozen 30,765 ETH qualifies as North Korean property under U.S.
enforcement law. If the court accepts this argument, the families with unpaid judgments would have a senior legal claim on these funds, taking precedence over the rsETH depositors who originally held them. The reason Arbitrum is involved is that after the rsETH exploit, its Security Council froze 30,765 ETH at a specific address on its network, effectively placing the funds under its control. Gerstein's filing references three underlying cases, with writs of execution totaling roughly $877 million.
The legal mechanism being used is CPLR §5222(b), a New York enforcement tool that allows creditors to freeze assets simply by serving a restraining notice, without first obtaining a new court order, although the target can challenge it afterward. Once served, the recipient is barred from moving the assets for up to a year or until the judgment is resolved, with potential contempt of court consequences for non-compliance. However, the complication arises from Arbitrum DAO's unclear legal status, making it challenging to determine who would be held responsible.
The filing and legal theory have drawn criticism within the same forum thread, with delegate Zeptimus arguing that the legal premise is flawed, stating that the ETH 'is not property in which the DPRK has an interest… It's 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. Blocking this process, Zeptimus argues, 'shifts the cost of the DPRK's debt onto a different set of victims who were themselves robbed.' Delegates were previously weighing different trade-offs, with Entropy Advisors urging a FOR vote due to the daily interest cost to Aave users with stuck positions, and Axia flagging questions about whether the Arbitrum Captive Insurance Product would cover delegates if something went wrong.
Gerstein's filing significantly sharpens this question, particularly regarding coverage for ordinary delegate liability versus exposure tied to a live enforcement action. Ultimately, the decision comes down to a choice between victims: Aave depositors with positions they cannot close, and families behind decades-old judgments against North Korea who are still seeking compensation.