A federal case is unfolding over $71 million in frozen cryptocurrency following the Kelp DAO exploit, as Aave seeks to release the funds for DeFi recovery. Victims of decades-old North Korean terrorist acts have filed a restraining notice against Arbitrum DAO, claiming the 30,765 ETH as DPRK-linked property. The dispute pits recent hack victims against long-standing terrorism judgment holders.
The Kelp DAO bridge exploit on April 19 drained ether from restaked ETH (rsETH) holders, marking the largest DeFi hack of 2026. Arbitrum's Security Council subsequently froze 30,765 ETH at a specific address on its network, valued at around $71 million. Aave is pushing to unfreeze these funds to compensate affected depositors, but a New York restraining notice under CPLR §5222(b) now blocks their release for up to a year or until resolved. Ignoring it risks contempt of court charges for those controlling the assets. Gerstein Harrow LLP served the notice on behalf of three sets of judgment creditors holding roughly $877 million in claims against North Korea from cases including the 1972 Lod Airport massacre, the abduction and killing of Reverend Kim Dong Shik in 2000, and weapons supplied for the 2006 Israel-Hezbollah war. Attorney Charles Gerstein argues the funds qualify as North Korean property, linked to the state-sponsored Lazarus Group, giving his clients a senior claim over rsETH depositors. Arbitrum DAO delegates are debating the move. Delegate Zeptimus countered that the ETH is stolen property belonging to original owners, not DPRK assets, warning that blocking recovery 'shifts the cost of the DPRK's debt onto a different set of victims.' Others like Entropy Advisors highlighted daily interest costs to Aave users with stuck positions.
