Aave Seeks Emergency Hearing to Lift $73 Million ETH Freeze from Kelp DAO Exploit Recovery

May 5, 2026

Aave LLC seeks to lift a restraining order freezing $73 million in Ether recovered after the April 18, 2026 Kelp DAO exploit that stole nearly $300 million. Attorneys holding a $330 million judgment against North Korea from 2015 served Arbitrum DAO a May 2, 2026 restraining order claiming North Korean hackers. An emergency hearing is scheduled May 6, 2026 at 11 am before Judge Margaret Garnett in the Southern District of New York.

Kelp DAO exploit recovery

▪Arbitrum DAO is poised to send the frozen crypto to a recovery fund meant to compensate users affected by the Kelp DAO hack.
▪Several organizations were able to freeze some of the stolen crypto from the Kelp DAO hack before it could be laundered.
▪Arbitrum DAO froze crypto worth about $71 million from the Kelp DAO hack.
▪The April 18, 2026 Kelp DAO hack saw hackers steal nearly $300 million in rsETH from the Kelp DAO protocol.
▪The Kelp DAO hackers used the stolen crypto as collateral to borrow other, more liquid assets on Aave.

Legal claims against frozen assets

▪Han Kim and Yong Kim are relatives of a South Korean minister who was abducted and presumably killed by North Korean agents in 2000.
▪People owed money by North Korea are trying to claim the frozen assets from the Kelp DAO hack, citing decade-old, multimillion-dollar legal judgments against North Korea.
▪On May 2, 2026, attorneys for victims of North Korea served Arbitrum DAO a restraining order forbidding the cooperative from transferring any property interests of the Democratic People's Republic of Korea.
▪Han Kim and Yong Kim secured a $330 million judgement against North Korea in US federal court in 2015.

Aave emergency motion

▪Aave founder Stani Kulechov stated that Aave was rejecting the baseless claim that stolen property title belongs to the thief.
▪Aave LLC argued that the frozen assets do not belong to North Korea or any affiliated entities, but instead belong to the users of the Aave Protocol.
▪On May 5, 2026, Aave LLC filed an emergency request asking the court to throw out the restraining order to avoid catastrophic injuries to the Aave Protocol, its users, and the DeFi system.
▪Aave LLC argued that the victims contended based on conjecture from posts on the internet that the thief was North Korea and that by stealing the assets for a few hours, North Korea somehow became the rightful owner.

DeFi ecosystem implications

▪Aave LLC argued that a freeze would create unconscionable incentives because no one would dare to stop a thief from stealing funds or property if the reward for being a Good Samaritan was a legal battle.
▪Aave LLC stated that if the frozen assets remain subject to a freeze and are not made available to restore value to the Aave Protocol users, the entire DeFi ecosystem risks being destabilized.
▪The Arbitrum Foundation stated on May 5, 2026 that it was in active consultation with counsel to assess the situation regarding the frozen assets.

Court proceedings timeline

▪Judge Margaret Garnett gave the plaintiffs until noon on May 5, 2026 to respond to Aave's emergency motion.
▪An emergency hearing has been scheduled for May 6, 2026 at 11 am before Judge Margaret Garnett of the Southern District of New York.
▪The Arbitrum DAO vote on transferring the frozen assets to the recovery fund ends on May 7, 2026.

Perspective of Aave LLC and DeFi advocates

▪Aave LLC argued that a freeze would create unconscionable incentives because no one would dare to stop a thief from stealing funds or property if the reward for being a Good Samaritan was a legal battle.

Perspective of North Korea judgment creditors (Han Kim and Yong Kim)

▪Han Kim and Yong Kim are relatives of a South Korean minister who was abducted and presumably killed by North Korean agents in 2000.
▪Han Kim and Yong Kim secured a $330 million judgement against North Korea in US federal court in 2015.