Arbitrum DAO Votes to Release $70M Frozen ETH for Kelp Exploit Victims

Arbitrum DAO has passed a governance vote to release roughly $70 million in frozen ETH. The funds are intended for a coordinated recovery effort to compensate victims of the Kelp DAO rsETH exploit. The proposal, co-authored by Aave Labs, KelpDAO, LayerZero, EtherFi, and Compound, passed with 182.2 million votes in favor, around 91%.

The frozen ETH was initially locked by the Arbitrum Security Council last month after an attacker exploited a flaw in Kelp's cross-chain bridge, draining approximately $230 million from Aave users.

However, a restraining notice filed in the Southern District of New York by plaintiffs with unpaid judgments against North Korea could complicate the transfer. The plaintiffs claim the frozen ETH is North Korean property, citing the hack's attribution to the Lazarus Group.

Legal experts warn that executing the DAO vote now could risk contempt of court for anyone involved in the transfer who is under U.S. jurisdiction. Aave LLC has asked the court to vacate the restraining notice, arguing the freeze is causing immediate harm to users.