So, a US law firm is trying to stop the transfer of $73 million in frozen ETH from the Kelp exploit. They say they’ve got $877 million in judgments against North Korea backing them up.
Basically, this law firm filed a notice to freeze the Ether linked to the Kelp hack, and a court in New York gave the green light for some serious legal moves against the Arbitrum DAO.
Their argument? They claim their clients are owed big bucks from North Korea. After the Kelp hack, the Arbitrum Security Council put a freeze on 30,766 ETH, that’s over $73 million! Aave Labs came up with a plan to unfreeze those funds and help out the victims through something called DeFi United.
But there’s some debate going on. One member of the Arbitrum DAO thinks blocking those funds is only gonna hurt the actual victims of the exploit.
But here’s the kicker... we’re still not sure if the Lazarus Group was really behind the hack. It’s just a theory for now.
"Aave" asserts that this claim is unsubstantiated, and that "A thief does not legally own what he steals" This is indeed a strong argument; even if it were proven that Lazarus was indeed responsible for the hack, how could the claimant company be compensated with money Lazarus allegedly stole from Kelp DAO? This is bizarre, and I suspect it's illegal.
The most likely scenario will be that the freeze will be lifted and the money returned to the victims after the next court hearing because "Aave" based its case on the American legal principle that a thief does not acquire ownership of stolen goods.
Aave Labs is representing Kelp DAO, Arbitrum DAO, and other similar companies. Gerstein Harrow LLP is representing other victims. The trial is an adversarial process, but it's very difficult to predict what the court will decide or how long the process will last. 30,766 ETH is a large sum, and I'm not sure Gerstein Harrow will give up easily.
Yes, the amount is worth it and Gerstein Harrow will not give up easily, but if it can be proven through blockchain analysis that the funds left the Kelp DAO contract via Aave on Arbitrum to the attacker's address and were then frozen by the Arbitrum Security Council, this will make ownership very clear.
But I don't know if the judge would accept blockchain analysis as legal evidence.
The judge is not a blockchain expert, so renowned experts will be brought in for the civil case.
According to statistics, these types of cases can take several years to resolve, which would be extremely damaging for Kelp DAO and their partners. I'll be keeping an eye on how this case plays out.
From what Ive seen in crypto cases, freezing funds like this can protect assets temporarily, but dragging legal battles into DeFi often ends up delaying compensation and hurting the very victims its supposed to help.
Haven't you realized yet that lawyers don't care about victims? In this case, only the interests of lawyers and their clients are important.
The New York Federal Court postponed the hearing on the case of frozen ETH until June 5, 2026
https://financefeeds.com/new-york-judge-delays-hearing-on-aave-request/
Soon we will again watch how justice prevails in the DeFi sector