A US law firm has filed a cease and desist notice to block the transfer of frozen ether from the Kelp exploit, arguing that its clients owe North Korea more than $877 million in compensatory and punitive damages.
Charlie Gerstein, lawyer of the American law firm Gerstein Harrow LLP, he said on Friday in a post on the Arbitrum DAO forum that the Novel York district court signed disabled under a restraining order and three enforcement orders preventing DAO from moving Ether under penalty of contempt of court.
The firm argued that its clients, who were unaffected by the Kelp exploit, won default judgments against North Korea in three separate U.S. court cases in 2010, 2015 and 2016 and are owed a total of $877 million in compensatory and punitive damages, plus interest. She also argued that her clients had claims to DPRK ownership. Gerstein claimed in the restraining order notice that the stolen Ether constitutes “property” in which the DPRK has an interest because the hacker group is affiliated with that country.
The freeze may mean those affected by the Kelp exploit may have to wait longer to recover their funds. This is not the first time the company has tried to recover stolen cryptocurrency.
On April 18, Kelp DAO was the victim of a $292 million hack believed to have been committed by TraderTraitor, a subset of the North Korean state-backed hacking unit Lazarus Group.
Days later, the Arbitrum Security Council took emergency action to freeze 30,766 Ether (ETH) worth over $73 million held in a wallet linked to the Kelp exploit.
Charlie Gerstein, a lawyer for Gerstein Harrow, posted a notice of injunction aimed at preventing the Arbitrum DAO from moving frozen ether. Source: DAO decision
Funds have been proposed for seaweed victims
On April 25, Aave Labs proposed that the Arbitrum DAO unlock $73 million in Ether tied to the Kelp DAO attack and direct those funds to “DeFi United”, a fund aimed at restoring rsETH and compensating its holders.
Arbitrum DAO member under Zeptimus he said that if the law firm’s actions are successful, the DPRK’s debt will not be transferred to the Kelp DAO victims.
“Your clients’ losses are real and the DPRK should be responsible for them. However, the remedy requested in the restraining order, which is to block the return of stolen funds to their beneficial owners, shifts the cost of DPRK’s debt to another group of victims who were themselves robbed. This exacerbates the original harm, rather than repairing it,” they said.
Gerstein Harrow has made similar claims before
Gerstein Harrow has filed similar cases in the past, arguing that its clients have claims to funds stolen by the DPRK and frozen by crypto companies. In February, the company filed claim against funds frozen by Tether that remain stolen in the Heco Bridge hack in 2023.
Related: North Korean hackers used artificial intelligence social engineering in the Zerion attack
She also filed a class action lawsuit against many DAOs. At the same time, onchain detective ZachXBT accused law firm using his research in court documents rate $1.5 billion claim for Bybit hack funds.
The law firm has three current cases against DAO on its website. Source: Gerstein Harrow
North Korea-linked entities have been accused of stealing at least $578 million in major incidents that occurred in April and have been linked to many of the industry’s biggest hacks, including the Bybit exploit.
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