NY Notice Blocks Arbitrum $71M ETH for NKorea Judgments

A lawyer representing families holding nearly $877 million in U.S. court judgments against North Korea has served Arbitrum DAO with a New York restraining notice, blocking the release of approximately 30,766 ETH valued at about $71 million. The funds, frozen by Arbitrum's Security Council following the April 18 Kelp DAO exploit, were set to support a recovery effort for hacking victims.

The exploit drained roughly $292 million from Kelp DAO, a liquid staking protocol on Arbitrum, primarily through a vulnerability in its LayerZero-based bridge involving rsETH tokens. Arbitrum's Security Council quickly identified attacker-linked addresses and froze the ETH, coordinating with law enforcement. Governance participants then proposed transferring the assets to a multisignature wallet managed by a coalition including Aave Labs, Kelp DAO, LayerZero, EtherFi, and Compound. The plan aimed to compensate affected users, such as those with stuck positions on Aave, and restore backing for rsETH. A Snapshot vote showed over 99 percent support as of early May, with a May 7 deadline.

Attorney Charles Gerstein of Gerstein Harrow LLP filed the notice on behalf of plaintiffs in three federal cases:...