Arbitrum Approves $71 Million ETH Release Amid Ongoing US Legal Dispute

Arbitrum DAO backs recovery plan after rsETH exploit

Arbitrum delegates voted with more than 90% support to release nearly $71 million worth of frozen Ether connected to the Lazarus-linked rsETH exploit that shook decentralized finance markets in April. The approved proposal authorizes the transfer of 30,765 ETH, which had been frozen by Arbitrum’s Security Council after attackers allegedly used unbacked rsETH tokens to borrow nearly $230 million in ETH through Aave.

The recovered funds are expected to support a joint compensation effort involving Aave, KelpDAO, LayerZero, EtherFi and Compound to reimburse affected users and stabilize market confidence.

US court battle creates uncertainty over frozen Ether

Despite the governance approval, the ETH cannot move immediately because the proposal falls under Arbitrum’s Constitutional AIP process, which requires at least an eight-day delay before execution. During that period, a Manhattan federal court could intervene.

Lawyers representing families with unpaid terrorism judgments against North Korea argue the frozen assets belong to the Lazarus Group and should be seized. Meanwhile, Aave maintains the funds belong to innocent users and warns prolonged restrictions could trigger broader instability across DeFi lending markets.