Key Highlights

  • A federal judge modified a restraining order to allow Arbitrum DAO to proceed with a governance vote transferring $71 million in frozen ETH to a wallet controlled by Aave.

  • The funds were intercepted after being linked to a $292 million exploit on KelpDAO attributed to the North Korean Lazarus Group in April 2026.

  • Aave agreed to remain bound by the original restraining notice, meaning the ETH could still be seized if terrorism creditors prevail in court.


A federal judge has cleared the way for $71 million in frozen Ethereum to move from Arbitrum DAO to Aave, though the ruling leaves the underlying dispute over ownership of the funds unresolved.


Judge Margaret Garnett modified a restraining notice that had been served on Arbitrum DAO, allowing participants to proceed with a governance vote authorizing the transfer. The order also shields anyone who votes on or helps execute the transfer from personal liability under the notice.


The funds trace back to an April 18 exploit against KelpDAO, in which attackers drained roughly $292 million in restaked ETH from a LayerZero bridge. The attack has been widely attributed to the Lazarus Group, a North Korean state-linked hacking operation. Developers connected to Arbitrum intercepted around $71 million before the attackers could move it through mixers or cross-chain bridges.


The legal complication arrived on May 1, when an attorney filed a restraining notice on behalf of creditors holding $877 million in unpaid terrorism judgments against North Korea. The creditors argued that because the stolen funds originated from a DPRK-linked operation, the intercepted ETH qualifies as enemy property subject to civil seizure.


Aave pushed back, arguing the assets belong to users of its protocol and not to any state actor, and warned that prolonged freezing would cause irreparable harm to the platform. The judge's ruling addressed the immediate procedural question but did not settle who ultimately owns the funds. The key condition is that Aave LLC agreed, as part of the order, to be treated as if the restraining notice had been served on it directly. That means if the terrorism creditors prevail on the merits, Aave could be required to surrender the ETH. The funds move, but the legal fight continues.