Arbitrum delegates are currently deliberating on whether to release 30,765 ETH frozen following the rsETH exploit into a coordinated recovery effort. However, a lawyer representing victims of North Korean terrorism has intervened, stating that the release cannot proceed.
The ETH 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. The lawyer, Charles Gerstein, has filed 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 the judgments, leading the families to search for any North Korean assets that can be legally seized.
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 argument, the families with unpaid judgments would have a senior claim on the funds, prioritizing them over 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, effectively placing the funds under its control. The legal mechanism being used is CPLR §5222(b), a New York enforcement tool that allows creditors to freeze assets by serving a restraining notice without requiring 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, with potential contempt of court consequences for non-compliance. However, the situation is complicated by Arbitrum DAO's unclear legal status, which means the risk does not neatly attach to the DAO but to whoever a court ultimately decides has control over the frozen ETH.
The filing has drawn pushback from within the forum thread, with delegate Zeptimus arguing that the legal premise is flawed, stating that the ETH is stolen property and does not belong to North Korea. In this view, the funds should be returned to their rightful owners, the original rsETH depositors, rather than being blocked to compensate the families of North Korean terrorism victims. Delegates were previously weighing the trade-offs of releasing the funds, considering factors such as the daily interest cost to Aave users with stuck positions and potential coverage under the Arbitrum Captive Insurance Product. Gerstein's filing has sharpened the question, highlighting the choice between compensating victims of the rsETH exploit and those with long-standing judgments against North Korea.