Law Firm Uses 2015 North Korea Ruling to Seize $71M in KelpDAO Funds, Sparking Backlash

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How a 2015 North Korea Ruling Could Hijack $71M in KelpDAO Funds

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A US law firm is using a 2015 court judgment to claim frozen crypto assets linked to North Korea-backed hacks
The firm’s strategy relies on publicly available blockchain analysis from earlier cases to assert priority over seized funds
Critics argue the approach has no direct connection to recent crypto hacks and could complicate payouts for victims

A U.S. law firm is trying to seize cryptocurrency that’s believed to be connected to cyberattacks originating from North Korea. They’re basing their claim on a court decision from 2015. This action comes after Arbitrum froze funds stolen in the April 2026 Kelp DAO hack, which authorities link to the Lazarus Group. It’s sparking debate about how money recovered from hacks should be given back to those affected, with some experts concerned this approach could make it harder for recent hack victims to get compensated.

The problem came to light after Imperium Paper pointed out possible legal issues. Their post suggested the Arbitrum Security Council disapproved of the DAO for this reason. They explained that a restraining order from 2015 might hold up transfers and complicate efforts to resolve the situation involving Reverend Kim.

Okay, so here’s what’s going on with Arbitrum and why the Security Council stepped in. Apparently, lawyers representing people harmed by North Korea have discovered a significant amount of North Korean crypto assets. They’re trying to seize these funds to satisfy a legal judgment from 2015. This means a restraining order is likely going to be put in place, which will probably make things complicated for anyone trying to move funds around. It’s a messy situation, and it explains why the Council took the action they did – they’re trying to prevent these seized assets from being moved before the legal process plays out. As an investor, it’s definitely something to keep an eye on, as it could impact transactions on the network.

— PaperImperium (@ImperiumPaper) May 2, 2026

Disputed claims over frozen crypto

As a crypto investor, I was pretty shocked to see ZachXBT call out a US law firm on X, accusing them of using really aggressive tactics. He basically said they’re exploiting an old legal judgment to go after crypto assets that have recently been frozen – and he didn’t hold back, calling their strategy ‘pure evil’. It’s concerning to see this kind of thing happening in the crypto space.

The company uses publicly available blockchain data from previous cases, like those involving Bybit and Harmony, to claim ownership of funds they’ve seized. He expressed frustration that they simply analyze his publicly shared findings instead of doing their own investigative work, stating, “They just read my posts after I’ve already done the hard work of collecting the evidence needed to justify freezing the funds.”

The idea originated from a 2015 court case (Han Kim et al. v. North Korea) involving the 2000 kidnapping of Reverend Dong Shik Kim. However, those who question the claim point out that it isn’t directly linked to the recent cryptocurrency thefts.

Broader legal and security pressures

Gerstein Harrow LLP has previously taken legal action against similar crypto organizations and DAOs. They’ve handled cases connected to the same group involved here, known as Lazarus. U.S. law allows creditors who’ve won judgments against countries like North Korea to seize assets potentially linked to those judgments, which can include cryptocurrency held by crypto platforms or DAOs. However, when multiple parties make claims on the same assets, it can delay victims from receiving compensation and lead to legal battles over who gets paid first.

The cryptocurrency industry is facing increasing scrutiny. A recent lawsuit against Circle Internet Financial claims that their slow response to a security breach allowed hackers to steal $230 million worth of cryptocurrency.

Cybersecurity threats are increasing. Taylor Monahan, a security expert with MetaMask, says groups linked to North Korea have stolen billions of dollars in cryptocurrency since 2017, with attacks focused on exchanges like WazirX and Bybit. Additionally, researchers at R3ACH are warning that developers with ties to governments are subtly joining decentralized finance (DeFi) projects, raising concerns about potential risks.

This legal case brings to light a key issue in the crypto world: as freezing assets on the blockchain happens more often, disagreements about who has the legal right to those assets could determine how courts and decentralized organizations (DAOs) deal with getting those assets back and compensating victims.

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2026-05-02 09:25