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A Manhattan federal judge has cleared the way for Arbitrum DAO to transfer 30,766 ETH, valued at roughly $71 million, to Aave LLC following the April Kelp DAO exploit. The decision modifies a restraining notice that had kept the ether locked inside Arbitrum DAO since May 1, allowing an onchain governance vote to move the funds to an Aave-controlled wallet.
Judge Margaret Garnett of the Southern District of New York issued a two-page order on Friday. The court’s modification permits the onchain governance process to send the frozen ETH to Aave LLC, while addressing concerns among Arbitrum’s delegate base.
In the order, Judge Garnett clarified that “any party initiating that on-chain transaction, voting with regard to that on-chain transaction, or participating in the on-chain transfer of assets to Aave LLC shall not be in violation of the Restraining Notice.”
Arbitrum delegates had already voted to approve the release on Thursday, with 182.2 million ARB tokens in favor, representing roughly 91% of voting power.
The ruling followed an emergency motion filed by Aave through Morrison Cohen LLP. Aave asked the court to vacate the restraining notice entirely. As an alternative, Aave requested that the plaintiffs post a bond of at least $300 million. Judge Garnett declined both requests and instead allowed the transfer under the modified terms.
Even with the transfer approved, the dispute over the ETH is not resolved. Under the order’s third paragraph, Aave LLC agreed to be bound by the restraining notice as though it had been served directly. That means the funds remain legally encumbered once they reach Aave’s wallet.
Aave founder Stani Kulechov publicly disputed the creditors’ position, saying: “These funds belong to the affected users they were stolen from, full stop.”
The plaintiffs, represented by Gerstein Harrow LLP, are terrorism judgment creditors seeking to attach the ETH as North Korea-linked property. Their legal theory relies on the Foreign Sovereign Immunities Act and the Terrorism Risk Insurance Act.
The restraining notice names Lazarus Group and APT-38 as DPRK instrumentalities, citing LayerZero’s attribution of the Kelp DAO bridge breach. Three underlying judgments—Kim v. DPRK, Kaplan v. DPRK, and Calderon-Cardona v. DPRK—carry a combined face value exceeding $877 million before post-judgment interest.
The 30,766 ETH transfer is described as the single largest contribution to DeFi United, a cross-protocol recovery effort. The initiative has raised over $320 million to restore rsETH’s economic backing after the $292 million Kelp DAO exploit in April.
Other major contributions include 30,000 ETH from Consensys and Joseph Lubin, and a 30,000 ETH loan from Mantle. Aave also liquidated the attacker’s remaining rsETH positions earlier this week as part of the broader effort.
Gerstein Harrow has pursued a wider strategy of attaching North Korea-linked crypto assets across DeFi platforms. A separate January lawsuit targeted Railgun DAO and Digital Currency Group over alleged laundering of proceeds from prior North Korean cyberattacks, including the $1.5 billion Bybit exploit.
In that case, the court has not yet scheduled a hearing to determine who holds the stronger legal claim to the frozen ETH.
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