New York Federal Judge Orders Arbitrum DAO to Keep $71M in ETH Frozen in Case Tied to North Korea-Linked Hack

A federal court in Manhattan has issued an injunction directing Arbitrum DAO not to move roughly $71 million worth of ETH that was frozen after the KelpDAO hack, according to filings in the U.S. District Court for the Southern District of New York dated May 3. The plaintiffs are seeking to use the frozen crypto to satisfy unpaid judgments stemming from what the filings describe as North Korea's long-running involvement in terrorism, kidnappings and related misconduct. Court papers show the plaintiffs have asked for permission to use substituted service to notify Arbitrum DAO and are treating the DAO as a liable "partnership." The court also pointed to Arbitrum's Security Council, which is governed by ARB holders and can act in emergencies, warning that members who refuse to cooperate could face legal consequences, including contempt of court. Market participants say the dispute could become a landmark test of how U.S. courts may apply traditional legal tools to DAO governance, underscoring intensifying compliance pressure on DeFi protocols as they intersect with real-world legal systems.