#DeFiLossesTop600MInApril

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A US court has blocked the transfer of $73 million worth of frozen Ether from the Kelp attack due to an $877 million lawsuit linked to North Korea.

The US court's decision has prevented the transfer of $73 million of frozen Ether from the Kelp attack.

The law firm is demanding that this money be used to pay its clients $877 million in damages stemming from North Korea.

If the process continues in this way, $ETH victims may receive their money even later.

Critical situation: The risk of victims suffering a second loss is being discussed.

The US-based law firm Gerstein Harrow obtained a court order to block the transfer of frozen Ether from the Kelp attack, citing the $877 million damages claim against North Korea. According to the official order issued by the New York district court, Arbitrum DAO is prohibited from transferring the frozen Ether funds elsewhere. Gerstein Harrow states in its filing that its clients were awarded a total of $877 million in damages in three separate lawsuits against North Korea in 2010, 2015, and 2016. The company also claims that the frozen Ether belongs to hacker groups linked to the North Korean state.
Last April, Kelp DAO suffered a massive $292 million attack. The attack is believed to have been carried out by TraderTraitor, a group identified as a subgroup of the notorious Lazarus Group hacker network, which is allegedly supported by North Korea. Shortly after the incident, the Arbitrum Security Council urgently froze 30,766 Ether (approximately $73 million) in a wallet linked to the attack. Subsequently, discussions arose regarding how these funds should be used.

Five days after the attack, Aave Labs proposed to Arbitrum DAO that the frozen Ether be unfrozen and transferred to a fund called "DeFi United" to compensate rsETH holders for their losses. However, legal claims regarding ownership of the frozen funds complicated the process.

US Law Firm Claims: Claim for Compensation and Efforts to Seize Funds

The Gerstein Harrow law firm states that its clients have receivables from three separate lawsuits filed against North Korea, and therefore the frozen Ether should be considered "assets belonging to North Korea." Attorney Charlie Gerstein, in a post on the Arbitrum DAO forum, explained that an official letter from a US court prevented Arbitrum DAO from transferring Ether, and that violating the decision would have severe consequences.
A member of the Arbitrum DAO community, using the pseudonym Zeptimus, pointed out that if the law firm succeeds, the debt belonging to North Korea could be transferred to those affected by the Kelp DAO attack.

Other members of the DAO believe that this obstacle to the frozen funds reaching the real victims is unfair and that those who suffered the most will be victimized a second time.

Legal disputes and previous examples in crypto funds

Gerstein Harrow has previously made similar claims on funds allegedly originating from North Korea and frozen on various exchanges or projects. It is known that an application was filed in February for assets frozen on Tether following the Heco Bridge attack in 2023. Furthermore, the firm was actively involved in a $1.5 billion hack on another crypto exchange and in class action lawsuits against various DAOs.

The blockchain researcher accused the firm of using its own research as evidence in the legal proceedings. The firm's website shows three active lawsuits.

North Korean-linked actors are known to have been involved in numerous hacking incidents in April that resulted in total losses of at least $578 million in the cryptocurrency ecosystem, and their names have been mentioned in some of the biggest cyberattacks in the sector.
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