Aave Files Emergency Motion to Unfreeze $292M in Kelp DAO Exploit Funds

Aave has filed an emergency motion in the U.S. District Court for the Southern District of New York, seeking to lift an injunction that restricts Arbitrum DAO's ability to manage 30,766 ETH, valued at approximately $292 million. These funds are linked to the Kelp DAO exploit, which resulted in significant losses on April 18. The restraining order was initiated by Gerstein Harrow LLP, which asserts its client is owed over $877 million from a North Korea-related default judgment, arguing the stolen crypto falls within this debt's scope. Aave, as reported by CoinDesk, contests this claim, asserting that legal ownership cannot be established via theft and that the alleged connection to North Korea lacks substantiation. The protocol warns that freezing these assets could destabilize the broader DeFi ecosystem, potentially complicating future recovery efforts and triggering cascading liquidations. Arbitrum DAO is currently conducting an on-chain vote, expected to conclude May 7, regarding the release of funds to DeFi United for user compensation.