Arbitrum delegates are in the process of weighing whether to release 30,765 ETH frozen after last month’s rsETH exploit in a coordinated recovery effort. But a lawyer for victims of North Korean terrorism showed up at the forum and told them they couldn’t.
Ether was drained from holders of re-staked ETH (a token representative of ETH that is locked on another platform for fixed returns) during the April 19 Kelp DAO bridge exploit, which CoinDesk previously reported as the biggest DeFi hack of 2026.
The governance article, written by attorney Charles Gerstein, serves as a restraining notice under New York law on behalf of three groups of judgment creditors holding approximately $877 million in claims against the Democratic People’s Republic of Korea.
The claims behind the filing date back decades. One of them arises from the Lod airport massacre in Israel in 1972, where gunmen killed 26 people, including 17 Puerto Rican pilgrims, in an attack that a US court later determined had been supported by North Korea.
Another involves the Rev. Kim Dong Shik, an American permanent resident kidnapped near the Chinese border in 2000 and later killed in DPRK custody. A third relates to the 2006 Israel-Hezbollah war, where a federal judge found that Pyongyang had supplied weapons and training used in rocket attacks.
The plaintiffs won their cases but North Korea never paid. Since sovereign assets are effectively impossible to seize, the families have spent years searching for any North Korean property they can legally claim to satisfy their sentences.
Gerstein’s filing argues that because US authorities have linked the Lazarus Group, the hacking unit responsible for the exploit, to the North Korean state, the 30,765 ETH frozen by the Arbitrum Security Council qualify as North Korean property under US enforcement law.
If the court accepts that framework, families with unpaid judgments would have a superior legal claim to those funds, ahead of the rsETH depositors who originally held them.
The reason Arbitrum is involved is simple: 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 points to three underlying cases, Calderón-Cardona, Kim and Kaplan, with enforcement orders totaling approximately $877 million.
The legal tool used is CPLR §5222(b), a New York enforcement mechanism 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 later.
Once notified, the recipient is prevented from moving the assets for up to one year or until the judgment is resolved. Ignoring it can lead to contempt of court, the same category of crime used when someone defies a judge’s order.
The complication here is that Arbitrum DAO is not a company with a clear legal status. That means the risk is clearly not attributable to “the DAO,” but to whoever ultimately decides that a court has control over the frozen ETH.
The presentation and legal theory presented generated rejection within the same forum thread. Delegate Zeptimus argued that the legal premise is the other way around, writing that ETH “is not property in which the DPRK has an ‘interest’… It is stolen property,” adding that under basic property law “a thief acquires no title.”
From that point of 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 that process, Zeptimus wrote, “shifts the cost of the DPRK’s debt to a different group of victims who were robbed.”
Delegates had been working on a different set of tradeoffs. Entropy Advisors urged a FOR vote, citing the daily interest cost for Aave users with stagnant positions. Axia raised questions about whether the Arbitrum captive insurance product would cover delegates if something went wrong.
Gerstein’s presentation sharpens that question considerably, where the delegate’s ordinary liability coverage is one thing but the exposure linked to a live enforcement action is another.
What remains is a choice among the victims. On the one hand, Aave depositors with positions that they cannot close. On the other, the families behind decades-old judgments against North Korea, which they are still trying to collect.
