An interesting situation has emerged on Arbitrum. While a vote was underway to release the 30.765 ETH that had been frozen after the rsETH shortfall, lawyer Charles Gerstein—representing victims of North Korean terrorism—entered the forum and said that this would not be possible.

The legal grounds are as follows: the lawyer claims that this ETH is property linked to a state that operates under the North Korean flag. Because the Lazarus Group is linked to Pyongyang, he argues that these assets could be regarded as DPRK property under U.S. sanctions laws.

What’s going on here? The background is a bit complicated. Gerstein’s application is based on three main lawsuits: the 1972 Lod Airport Massacre (26 people were killed), the kidnapping of Reverend Kim Dong Shik in 2000, and allegations that North Korea supplied weapons during the 2006 Israel–Hezbollah war. The plaintiff families won these cases, but North Korea never paid. Total claim: 877 million dollars.

Over the years, these families have worked to find any North Korean assets they could seize. Now, it seems they’ve found this ETH, which is controlled by the Arbitrum Security Council. The legal argument is: if a court recognizes these assets as DPRK property, then the victims would have a higher legal claim than the original rsETH deposit holders.

Reaction on the forum came quickly. Delegates argued that the ETH is stolen property and should be returned to its owner. Zeptimus pointed to the principle of fundamental property law: a thief cannot acquire ownership rights. From that perspective, the funds belong to the rsETH deposit holders.

So what’s the outcome? Essentially, a choice must be made between two groups of victims. On one side are the Aave deposit holders who cannot close their positions. On the other side are the families behind decades of court rulings. Both sides are justifiably claiming to be the victims. Arbitrum delegates will have to make a difficult decision.