A Manhattan federal judge has authorized the Arbitrum DAO to transfer $71 million in frozen Ether to Aave, enabling the DeFi protocol to advance its recovery plan linked to a North Korea-related exploit. Judge Margaret Garnett modified an existing restraining notice on May 9, 2026, allowing for this movement of funds while maintaining legal claims from terrorism victims against the assets.
The court's decision follows a supportive off-chain Snapshot vote by Arbitrum delegates aimed at facilitating the transfer as part of Aave's recovery strategy after the exploit last month. However, the actual transfer will require a separate on-chain governance vote to finalize the process.
Aave had previously filed an emergency motion to lift the restraining notice, which had prevented Arbitrum from distributing the funds to victims of the Kelp DAO exploit. Representing families with $877 million in unresolved terrorism judgments against North Korea, Gerstein Harrow LLP argued that the stolen funds rightfully belong to their clients. Aave contended that any claims of lawful ownership by North Korean hackers are unfounded and cautioned that upholding the freeze could hinder future recovery efforts in decentralized finance.