U.S. District Judge Margaret Garnett issued a ruling that revises an earlier restraining order against Arbitrum DAO, clearing the way for an on-chain governance vote to move approximately $71 million in ETH to Aave. Critically, the court instructions protect all participants — whether proposing, voting, or facilitating the transfer — from liability under asset freeze rules.
Legal Hurdle Removed for On-Chain Vote
The Arbitrum community had already signaled broad support for returning the funds through an off-chain Snapshot vote. However, the actual release required a binding governance decision on the blockchain. Garnett's ruling now makes that binding step feasible. The funds were originally compromised in an attack and immobilized on Arbitrum; Aave intends to use the recovered ETH to compensate victims.
Attorney Targets North Korea-linked Assets
Lawyer Charles Gerstein represents terror victims who collectively hold $877 million in unenforced court judgments against North Korea. He argued in court that the frozen ETH, allegedly tied to the Lazarus Group and sanctioned by Pyongyang, rightfully belongs to those harmed by state-sponsored cyberattacks. Gerstein's tactics signal a broader legal campaign to track down North Korea-linked digital assets across decentralized finance platforms.
Plaintiffs claim that North Korean groups laundered crypto through Railgun after siphoning $1.5 billion in assets from sources such as Bybit exchange. They argue Railgun should have detected and frozen these assets in advance, but the absence of such intervention allowed the funds to move.
Railgun Under Scrutiny
In March, after Railgun DAO failed to mount a defense in a related case, plaintiffs sought a default judgment from the federal court in Washington. Meanwhile, Digital Currency Group's 2022 acquisition of $10 million in Railgun governance tokens prompted further scrutiny, with plaintiffs suggesting the firm played a material role in both management and financial outcomes. In February, the plaintiffs separately petitioned authorities to safeguard USDT holdings that the U.S. government aimed to seize.
The court's decision marks a key moment in the ongoing debate over asset freezing and fund recovery in DeFi, especially amid high-profile North Korea-linked cyberattacks. Aave can now process the $71 million in ETH, and the outcome is expected to restore some confidence in decentralized protocols' ability to cooperate with law enforcement. As legal battles continue between DeFi platforms, governments, and cybercrime victims, the latest ruling pushes toward formal procedures and regulatory compliance. The focus now shifts to the on-chain governance mechanisms needed to finalize what could become a landmark transfer, shaping future approaches when criminal proceeds are intercepted on decentralized platforms.