TL;DR:
- Aave filed an emergency motion to lift a court order that froze approximately $73 million in ETH linked to the Kelp DAO exploit.
- The attribution of the attack to the North Korean Lazarus Group has not been proven, according to the protocol’s filing in federal court.
- The “DeFi United” initiative mobilized more than 137,700 ETH, equivalent to nearly $327 million, to compensate victims of the exploit.
Aave filed an emergency motion in a U.S. federal court to lift a court order mandating the freeze of approximately $73 million in ETH recovered following the Kelp DAO exploit that occurred on April 18. The order prevents Arbitrum DAO from transferring those funds while plaintiffs linked to terrorism judgments against North Korea seek to claim them.
The decentralized finance protocol argues that those claims rely on an unproven attribution pointing to the hacker group Lazarus Group as responsible for the attack. It also contends that even if that connection were true, temporary possession of stolen assets does not imply ownership over them. Stani Kulechov, founder of Aave, summarized it with a direct analogy: “A thief does not own what they steal“, comparing the situation to a criminal who takes diamonds from a jewelry store and a third party recovers them. “These funds belong to the affected users from whom they were stolen, plain and simple”, he added.
The Court and the Frozen Funds
The hackers exploited a vulnerability in a cross-chain bridge tied to Kelp DAO’s rsETH token. During the attack, unbacked collateral was used to borrow approximately $230 million in ETH from Aave users. Shortly after, the Arbitrum protocol intercepted around 30,766 ETH, currently valued at nearly $73 million, and set them aside for recovery. Those funds represented the first block of assets recovered following the exploit.
The industry’s response was decisive: under the name “DeFi United“, various protocols mobilized more than 137,700 ETH equivalent to nearly $327 million, contingent on the frozen funds being released and pending governance votes being completed.
Aave Seeks the Release of Funds or a $300 Million Bond
In its filing, Aave states that the frozen assets were taken from its users and do not belong to any alleged perpetrator. The protocol asks the court to revoke the restraining order or require the plaintiffs to post a bond of at least $300 million to cover potential damages if the freeze is maintained.
