More than 30,000 ETH▲$1,792.81 were placed under a court-ordered freeze.
The team behind leading DeFi protocol Aave has filed an emergency motion in federal court in the Southern District of New York, demanding the removal of a court-ordered freeze on 30,766 ETH, approximately $73 million.
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These funds were intercepted and frozen by Arbitrum’s Security Council after the Kelp DAO attack on April 18.
Aave’s Position
Protocol founder Stani Kulechov stated:
“A thief does not own what they stole. These funds belong to the users from whom they were stolen, and to no one else.”
In the motion, Aave’s lawyers emphasize that even temporary possession of stolen assets does not turn them into the attacker’s property. It also does not provide grounds to consider them North Korean property.
They are demanding either the full removal of the freeze or that the plaintiffs post a bond of at least $300M to cover potential damages from further blocking.
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Reason for the Conflict
The freeze was imposed at the request of the law firm Gerstein Harrow, representing plaintiffs in older cases involving North Korean terrorist activities. They seek to have the Ethereum (ETH) recognized as part of potential restitution, citing the assumption that the Lazarus Group was behind the attack.
Aave called this logic “legally unsound” and warned that a prolonged asset freeze jeopardizes the entire post-hack recovery mechanism. It delays compensation for affected users and could trigger cascading liquidations across the DeFi ecosystem.
Arbitrum Vote
The Arbitrum DAO is currently voting on whether to transfer the frozen ETH to the DeFi United fund to compensate victims. At the time of publication, more than 99% of participants support the proposal. The vote ends on May 7.
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