New York Judge Pushes Back Trial In Ave’s Bid To Free $71M In ETH

A New York judge has delayed a decision on Ave's emergency bid to free $71 million worth of crypto tied to victims of the $293 million KelpDao hack, asking for more information before a new hearing in June.

Aave wants to use $71 million in ETH frozen by Arbitrum to aid recovery efforts following one of the worst DeFi hacks this year, the Kelp DAO hack.

However, US law firm Gerstein Harrow LLP filed a restraining order in early May, saying its clients had a claim to the money. Ave then filed an emergency request to open the fund, arguing that if the fund is not opened soon, user liquidations and DeFi market instability could occur.

According to documents filed Wednesday in the Southern District of New York, Judge Margaret M. Garnett said Awe's filing earlier this month did not adequately describe how “incremental losses” to consumer funds would occur “if the ban were to continue.”

The judge asked for more information from both sides

Judge Garnett acknowledged that the case was complex and that there were risks for the victims and asked for further clarification from both sides to further explain their case.

“The Court recognizes the risk of imminent harm to Aave LLC and users of the Aave Protocol. Given the complexity of the issues raised in the parties' arguments and the May 6, 2026 schedule for oral argument and briefs, the Court orders the parties to submit additional briefs.”

The judge outlined six key points on which the court would seek additional information, including whether hacking transactions are governed by New York's accommodation principle. the legal difference between fraud and theft and what interest thieves have in stolen property; Which law governs the creditor's priority on the mortgaged property; Whether a constructive trust may be an appropriate remedy and whether Aave or Arbitrum can identify victims to fairly recover the property.

Ave and Gerstein Harrow will have until May 22 to file their briefs, with a hearing scheduled for June 5.

Related: DeFi can block stolen funds, but not everyone agrees it should.

The case comes amid extensive Kelp DAO recovery efforts. Kelp and Aave announced on Tuesday that they have taken the necessary steps to restore support for rsETH.

The hacker's rETH has been burned on Arbitrum, the lost tokens worth about $278 million will be returned in the next two weeks with funds from the Aave Recovery Guardian Multisignature Wallet.

Once the corresponding smart contracts are reactivated, all rETH usage will return to normal.

Source: Kelp DAO

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