The Arbitrum DAO has voted overwhelmingly to release roughly $70 million in frozen Ethereum to a recovery address controlled by Aave, KelpDAO, EtherFi, and Certora. The funds, seized after a major exploit, are intended to compensate victims, but a U.S. court restraining notice linked to judgments against North Korea could block the transfer and create legal risks for anyone involved in executing it.
Arbitrum DAO passed a governance vote approving the release of 30,765.67 ETH, worth approximately $70 million, to a coordinated recovery effort. The proposal, co-authored by several major protocols, passed with about 91% support.
The ETH was frozen by the Arbitrum Security Council last month following an exploit of Kelp’s cross-chain bridge. An attacker used unbacked rsETH as collateral on Aave to drain roughly $230 million from users.
The vote approves transfer to a multi-signature wallet controlled by four entities for the recovery effort. However, a restraining notice filed in a New York federal court now complicates execution.
Plaintiffs with unpaid judgments against North Korea obtained court permission to serve the notice on the DAO, claiming the frozen ETH constitutes North Korean property. Aave LLC has asked the court to vacate the notice, arguing it causes immediate harm.
Legal expert Yuriy Brisov stated that executing the transfer with knowledge of the notice risks contempt of court for any identifiable person in the chain. “The honest answer is: technically possible, but practically suicidal for anyone whose name is on the execution,” he said.
Brisov explained that a favorable court ruling could allow this specific transfer but sets a broader precedent. He noted the Security Council’s freeze action “proved… a control point exists,” providing a roadmap for future claims.
Alice Frei, head of legal at OMI, noted the vote is not self-executing and depends on governance steps and ongoing legal risk. Plaintiffs may continue to challenge whether the ETH is “attachable property,” preventing a guaranteed execution path.
The “DeFi United” recovery effort raised over $300 million following the exploit. The frozen ETH covers part of an estimated 76,127 rsETH shortfall, with the proposal itself incurring no new cost to the DAO.
