Aave is petitioning a U.S. federal court to unfreeze more than $71 million in Ether recovered from the April 18 Kelp DAO exploit, arguing the funds belong to victims. The emergency motion, filed May 4, challenges a restraining order that has halted the return of assets to users.
“A thief does not own what he steals,” Aave founder Stani Kulechov said in a statement. “These funds belong to the affected users they were stolen from.” Aave’s legal team contends that even if an attacker gained temporary control, it does not grant them ownership rights over the stolen assets.
The legal battle began after the Arbitrum DAO intercepted 30,766 ETH, valued between $71 million and $73 million, shortly after the exploit. However, the funds were frozen on May 1 after plaintiffs with terrorism-related judgments against North Korea obtained a restraining notice, claiming the assets may be linked to the Lazarus Group. Aave’s filing in the Southern District of New York argues the assets are traceable proceeds of theft that should be returned to the protocol’s users on Arbitrum, an Ethereum layer-2 network.
The case now pits DeFi recovery efforts against broader legal enforcement, creating a test for how U.S. courts handle ownership of stolen digital assets. The frozen ETH was the first part of a larger recovery plan supported by a coalition called “DeFi United,” which includes Kelp DAO and LayerZero. Aave has asked the court for an expedited hearing or to require the plaintiffs to post a $300 million bond to cover potential damages from the delay.
This article is for informational purposes only and does not constitute investment advice.
