The Arbitrum Security Council has been prohibited from interacting with 30,000 ETH that were successfully frozen following a hacker attack on Kelp. This is stated in a ruling by the Federal Court for the Southern District of New York.
Source: court documents.
The frozen funds are claimed by victims of North Korean terrorists, affected in abduction incidents in 2015.
Among the plaintiffs are Han Kim and Young Suk Kim, U.S. citizens whose relative died as a result of those incidents. They managed to win a compensation of over $300 million from Pyongyang.
In the lawsuit, Arbitrum DAO is listed as the temporary owner of the funds. The organization was classified as a general partnership.
According to the order, which still needs to be officially delivered to Arbitrum’s authorized representatives, the structure is prohibited from moving or interacting with the frozen assets until further court orders.
A vote to transfer the 30,000 ETH to the DeFi United fund began almost simultaneously with the issuance of the ruling. The discussion will continue until May 7, and no suspension has been reported. At the time of writing, more than 99% of votes are in favor.
Document Assessment
Attorney Gabriel Shapiro reviewed the documents and stated that the ruling is real, not theoretical. The plaintiffs received court approval under special asset seizure laws, resulting in the DAO being deprived of the right to unilaterally redirect assets.
“Arbitrum currently has no right to do anything with Kelp’s funds until the hearing on their sale. […] In fact, they must participate in the legal proceedings, rather than simply making decisions on their own,” the lawyer added.
According to MegaETH’s economic head, known as ImperiumPaper, the court order will significantly complicate the return of funds to the affected protocol.
This is why the Arbitrum Security Council was not kind to the DAO. Lawyers for DPRK victims have now found a large pile of DPRK assets to seize to make good on a 2015 judgement against DPRK.
It appears a restraining order prohibiting the transfer of funds will complicate the… pic.twitter.com/P335TYlF71
— PaperImperium (@ImperiumPaper) May 2, 2026
He noted that the case is being handled by lawyers from Gerstein-Harrow, a firm known for lawsuits against DAOs and other structures related to the DeFi segment.
“This is a predatory American law firm with a strategy of pure evil. Every time after a hack and freeze of crypto assets by the Lazarus Group, these clowns come and claim they have a claim on behalf of supposedly other DPRK victims from 26 years ago, which has nothing to do with the case,” noted on-chain investigator ZachXBT.
Back in April, Arbitrum’s tech council member Griff Green called for a boycott of USDC due to weak security systems.