Court Lets Arbitrum Dao Transfer $71M in ETH to Ave, North Korea-Tied Hack
A Manhattan federal judge has allowed Arbitrum Dao to move $71 million in frozen Ether to Ave, paving the way for a recovery for the DeFi protocol following North Korea-linked exploits.
Judge Margaret Garnett of the Southern District of New York issued the order on Friday, amending the restraining order that locked up the assets in the arbitration DAO. The amendment allows onchain governance to vote to send the funds to a wallet controlled by Aave LLC, and expressly prevents anyone participating in the transfer from being caught for violating the ban.
The order still puts terror victims' legal claims on the money, meaning Ave cannot use the funds freely and could be forced to hand them over if the court ultimately rules in favor of the terror victims.
The judge allowed Arbitrum to move funds to Aave. Source: Court listener
The decision comes after Arbitrum delegates strongly supported the move in an off-chain instant vote as part of Ave's broader recovery plan following last month's rETH exploit linked to North Korea. Any valid transfer still requires a separate binding onchain management vote.
Related: Arbitrum votes to release $71M to bypass frozen Kelp mining ETH
Ave asked the court to lift the ban on the funds
Last week, Aave Arbitrum DAO filed an emergency motion in New York court to vacate a restraining order that prevented it from transferring funds to victims of the Kelp DAO exploit. The notice was sent by Gerstein Harrow LLP, which represents families holding $877 million in unpaid terrorism judgments against North Korea that it says belong to its clients after North Korean hackers stole them on April 18.
Ave pushed back hard, arguing that a thief doesn't get legal ownership of stolen property and that linking the hack to North Korea depends on more than just internet speculation. The court warned that if the restraining order were to be granted, it would hamper Defin's future recovery efforts and provide a roadmap for bad actors to take advantage of the legal uncertainty after a hack.
Gerstein Harrow has previously made similar claims. In January, they filed a lawsuit against Railgun DAO, alleging that the privacy protocol was used to launder $1.5 billion in proceeds from North Korean hacking, including the Bybit exploit.
RELATED: Aave deposits fall by $15B as Kelp exploits take flight from defiant lender
Kelp mining puts $174 million in rsETH backing.
Kelp DAO used rsETH's support to a significant disadvantage. The hack caused 116,500 rETH to be released on Ethereum without a corresponding burn through the source, only 40,373 rETH in the adapter 152,577 on confirmed support, 76,127 rETH, the gap, approximately 76,127 rETH, at the current price of $174.5 million.
The 30,765 ETH frozen by Arbitrum has been suggested as a meaningful step to close that gap, with supporters arguing that even a partial restoration of rsETH support would help stabilize conditions for users on Arbitrum and the wider DeFi ecosystem.
Magazine: 53 DeFi Projects Hacked, 50M NEO Tokens May Be ‘Reclaimed': Asia Express
