Aave moves to unblock $71M in ETH as U.S. court freeze halts exploit recovery

Aave has filed an emergency motion to vacate a restraining notice that has frozen approximately $71 million in ETH recovered from the 18 April exploit.

The motion was filed in the U.S. District Court for the Southern District of New York. It argues that the assets belong to victims of the exploit and should be returned rather than seized.

Court order targets recovered funds linked to North Korea claims

The dispute stems from a restraining notice issued on 1 May against the Arbitrum DAO.

Plaintiffs in long-running cases against the Democratic People’s Republic of Korea are attempting to seize the funds to satisfy unpaid judgments.

The filing states that the restrained assets include ETH held on Arbitrum, which the plaintiffs claim may be linked to North Korea, including actors such as the Lazarus Group.

Under New York law, the restraining notice prohibits any transfer or movement of assets believed to be connected to the judgment debtor.

Aave argues funds belong to victims, not the attacker

In its motion, Aave contends that the restrained ETH represents recovered assets from the 18 April exploit. Also, they contend that the assets belong to affected users.

The filing states that a third-party attacker used unbacked rsETH to extract large amounts of ETH from the protocol, creating significant losses for users.

Members of the Arbitrum ecosystem later intercepted approximately $71 million of those funds as part of a broader recovery effort.

Aave argues that freezing these assets prevents their return to users and further harms victims who are already affected by the exploit.

Recovery effort clashes with legal enforcement

The frozen ETH had been earmarked for return through a coordinated recovery initiative involving multiple DeFi participants.

However, the restraining notice has halted that process.

Aave’s filing warns that continued restraint could lead to wider disruptions, including liquidity stress and cascading effects across DeFi markets if users remain unable to access funds.

The company is seeking an expedited hearing and temporary relief to allow the recovery process to continue.

Final Summary

• Aave has filed an emergency motion to unfreeze $71 million in ETH recovered from the 18 April exploit, arguing the funds belong to affected users.
• The case pits DeFi recovery efforts against U.S. court enforcement, with plaintiffs seeking to seize the assets to satisfy longstanding judgments against North Korea.