Aave’s path to recovering from April’s rsETH exploit hit a key turning point this week. On May 6, the protocol completed liquidation of positions tied to the attacker, closing out those rsETH-backed loans across both its Ethereum and Arbitrum deployments. Aave confirmed that no other users were affected and the liquidated collateral was moved to its recovery structure, as laid out by governance.
The biggest advancement, though, came after a Manhattan federal judge modified the restraining notice that had kept around 30,766 Ether — about $71 million — locked in legal limbo since the hack. With that decision, Aave can move the frozen Ether into the restitution process. The funds had been immobilized after the exploit and became central to the recovery plan.
But there’s still a question mark around whether this transfer fully closes the books for affected users. Market voices like Galaxy Digital’s Thaddeus Pinakiewicz have noted that, even after pulling together assets through governance and the latest legal win, it’s not certain that every user will be made whole. For now, Aave’s legal win puts it in a stronger spot, with exploit-linked positions wiped out and frozen collateral unlocked for restitution. But both AAVE and Ether continue to trade in a fragile, post-event market — recovery is underway, but the protocol isn’t out of the woods yet.