US court freezes $71M Arbitrum ETH seized from KelpDAO
A federal judge barred Arbitrum from moving 30,766 ETH (about $71M) seized after the April 18 KelpDAO hack after North Korean victims won an SDNY order to attach the funds.
A U.S. court has barred Arbitrum from transferring 30,766 ETH, roughly $71 million, that the protocol’s Security Council seized after a bridge exploit drained funds from KelpDAO on April 18. The order was issued on May 1 by the Southern District of New York after lawyers for two U.S. nationals sought to attach the tokens to satisfy a 2015 judgment against North Korea.
The April exploit removed about $290 million from KelpDAO. Arbitrum’s Security Council moved 30,766 ETH into governance control after coordinating with law enforcement while other protocols worked to recover funds. The SDNY order prevents the DAO from using or redirecting the seized tokens while the plaintiffs press their claim.
The plaintiffs, Han Kim and Yong Seok Kim, are U.S. nationals who hold a judgment from 2015 exceeding $300 million against the North Korean government for harm to a relative. Their lawyers obtained the court directive under federal garnishment statutes, seeking to attach assets they say are traceable to Pyongyang.
The freeze affects recovery plans organized by Aave and a coalition that had pooled ETH from Lido, Mantle and EtherFi to backstop rsETH holders. Those plans assumed the seized tokens could be returned through Arbitrum governance for redistribution; the court order bars such transfers while the matter is litigated.
A blockchain security tracker attributed the hack to the Lazarus Group and linked the stolen funds to North Korean actors. That attribution is central to the plaintiffs’ effort to tie the seized assets to the state named in their judgment.
Attorney Gabriel Shapiro wrote on X that the freeze is enforceable and requires court proceedings rather than unilateral action by the DAO. He wrote: “Arbitrum DAO is not allowed to do anything with the KelpDAO funds for now, until a divestiture hearing… they are supposed to actually litigate that not just decide on their own what to do with it.”
Legal filings and observers note that assets routed into protocol governance and centralized custody can become subject to traditional legal remedies, including attachment and garnishment. Some stolen funds remain in motion and appear to be moving through laundering channels, complicating full recovery.
A divestiture hearing in the Southern District of New York will determine whether the plaintiffs can collect the seized ETH to satisfy the 2015 judgment or whether Arbitrum DAO retains the authority to return or reallocate the tokens. Until that hearing, the 30,766 ETH will remain immobilized under the court order.
