- Arbitrum DAO voted overwhelmingly to release approximately $70 million in frozen ETH to a recovery multisig wallet.
- The funds are intended to compensate victims of a major exploit on the KelpDAO rsETH cross-chain bridge.
- A U.S. court restraining notice, filed by plaintiffs seeking to seize North Korean assets, could block the transfer and create legal peril for executors.
- Legal experts warn executing the vote now could constitute contempt of court for any U.S.-reachable person in the process.
- Aave LLC is challenging the restraining notice in court, arguing it causes immediate harm to users.
The governance body for the Arbitrum network voted decisively on Thursday to approve the release of 30,765.67 ETH, worth roughly $70 million, to a coordinated recovery effort. The funds were frozen last month following a major exploit against the KelpDAO rsETH bridge.
The proposal, co-authored by several prominent DeFi projects, passed with over 90% support. The ETH will be transferred to a multisig wallet controlled by Aave, KelpDAO, EtherFi, and Certora specifically for victim reimbursement.
However, a restraining notice filed in a New York federal court now clouds the execution path. Plaintiffs with judgments against North Korea, citing online attribution of the hack to the Lazarus Group, obtained court permission to serve the notice on Arbitrum DAO, claiming the frozen ETH is DPRK property.
Consequently, legal experts warn that executing the transfer now risks contempt of court for anyone reachable by U.S. jurisdiction. “The honest answer is: technically possible, but practically suicidal for anyone whose name is on the execution,” said Yuriy Brisov, a partner at Digital & Analogue Partners.
Meanwhile, Aave LLC filed a motion on Monday asking the court to vacate the restraining notice. It argues the freeze is causing immediate and irreparable harm to protocol users and, if the notice stands, requests plaintiffs post a $300 million bond.
The legal dispute hinges on whether the frozen assets constitute “attachable property.” Even if the freeze is lifted, experts note the visibility of the control point used to freeze the funds invites future similar claims by other plaintiffs.
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