Aave is asking a New York federal court to unfreeze just over $71 million in Ethereum that was recovered after the Kelp DAO exploit back in April. After the attack, about 30,766 Ether was recovered and immobilized on Arbitrum, with the intention of returning value to users affected by the losses. But getting those assets returned hasn’t been straightforward.
Plaintiffs represented by Gerstein Harrow, a law firm acting for parties with more than $877 million in default judgments against North Korea, served Arbitrum DAO with a restraining notice on May 1. Their position is that if North Korea’s Lazarus Group was behind the exploit, the recovered Ethereum should be considered North Korean property and seized to pay down those earlier judgments.
Aave’s emergency motion challenges that, saying the Ether belongs to victims of the Kelp DAO attack, not the attacker or outside creditors. The protocol warns that keeping the assets frozen risks compounding the harm for users still waiting for restitution.
This legal fight is about more than a single hack: once recovered on-chain assets are frozen within reach of courts, they can draw competing claims from outside the immediate victim group. The outcome may shape how courts handle crypto asset recoveries when multiple parties claim priority.