TLDR Tech / Crypto
KelpDAO Funds on Arbitrum Caught Between Recovery Vote and DPRK
Lazarus Group exploited a LayerZero bridge bug to steal $292M from KelpDAO in April, and after Arbitrum's Security Council froze $71M of the stolen ETH onchain, a New York court issued a restraining order on behalf of Han Kim and other DPRK terrorism victim families holding a combined $877M in unpaid US judgments against North Korea. Those creditors argue the frozen ETH constitutes seizable DPRK property, while the opposing position holds that North Korea never owned the funds and that KelpDAO hack victims are the rightful owners. A governance proposal backed by Aave, LayerZero, EtherFi, and Compound to release the ETH to a victim compensation multisig is passing the Arbitrum DAO vote, but multisig signers who transfer while the restraining order is active face personal legal liability. This is the first direct conflict between competing US court claims and DAO incident response governance, and the resolution will set precedent for how on-chain entities handle legal pressure during future hacks.
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