The US law firm Gerstein Harrow has achieved a legal victory, successfully halting the movement of frozen Ether connected to the Kelp hack through a court order. The New York district court’s decision now prevents Arbitrum DAO from transferring these Ether assets, which are currently frozen. The law firm argues that their clients deserve $877 million following multiple lawsuits against North Korea over the past decade. They claim that the frozen funds have connections to hacker groups supported by the North Korean state.
What Happened in the Kelp Hack?
In a significant breach last April, Kelp DAO was targeted in a $292 million exploit. The attack was allegedly executed by TraderTraitor, a sub-group linked to the notorious Lazarus Group, which is believed to be aligned with North Korean interests. Reacting promptly, the Arbitrum Security Council froze 30,766 Ether, valued at around $73 million, in wallets associated with the breach. The discussion about the usage of these funds has been ongoing since then.
What Are the Legal Arguments Supporting the Seizure?
Due to the court-awarded claims against North Korea, Gerstein Harrow is pursuing the assets, viewing them as subject to seizure. Attorney Charlie Gerstein has informed Arbitrum DAO members that the court order strictly prohibits any transfer of the frozen ETH, with warnings of severe repercussions for violations.
The announcement emphasized that the frozen Ether is treated as property tied to state-sponsored hacker groups and that their clients have a legitimate entitlement to these assets.
Concerns have been raised within the Arbitrum DAO community. Member Zeptimus highlighted the potential impact on those affected by the Kelp DAO attack, suggesting the burden of North Korean liabilities might fall unfairly on them.
Questions have arisen regarding the justice of the decision, as some DAO members fear that victims of the Kelp hack could end up suffering twice if the funds aren’t released to them.
Can Past Cases Offer Perspective on the Situation?
Gerstein Harrow’s history includes similar claims related to North Korea, aiming at frozen assets across various platforms. They filed for the release of Tether assets after the 2023 Heco Bridge incident and are engaged in class actions concerning a $1.5 billion hack and lawsuits involving other DAOs.
Blockchain investigator ZachXBT accused the firm of leveraging his research in their legal efforts, while the company’s official site lists three ongoing lawsuits related to these issues.
Reports repeatedly implicate North Korean actors in major crypto heists. In April, numerous attacks attributed to these agents caused estimated losses of over $578 million in the digital finance sector.
