U.S. Judge Allows Aave to Move $71M in Frozen ETH Tied to North Korea-Linked Exploit

A federal judge in Manhattan has cleared a path for Aave to recover roughly $71 million in frozen ether, marking a key early win for DeFi's largest coordinated asset-recovery push. U.S. District Judge Margaret Garnett ruled Friday that Arbitrum DAO may transfer 30,765 frozen ETH to an Aave-controlled wallet, amending a restraining notice that had previously blocked the move. The ETH was frozen following April's $292 million Kelp DAO bridge exploit, which has been attributed to North Korea's Lazarus Group. The case drew competing claims from terrorism judgment creditors seeking to collect $877 million in unpaid judgments against North Korea. The creditors attempted to seize the frozen ETH under the Terrorism Risk Insurance Act. In parallel, the DeFi United coalition—Aave, Kelp, EtherFi, LayerZero and Compound—has secured $311 million in pledges intended to restore rsETH backing. The court's order does not end the dispute: the terrorism plaintiffs' claim survives the transfer, setting up further litigation. Still, the decision is being watched as a meaningful precedent in a property-rights fight that could influence future on-chain recovery efforts.