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Aave has asked a US federal court to lift an emergency freeze on about $73 million in ether tied to the April Kelp DAO exploit, arguing the funds should return to affected users rather than claimants pursuing North Korea-related judgments. The dispute centers on a May 1 court order that restricted the movement of 30,766 ETH. Those assets were recovered after attackers exploited a cross-chain bridge linked to Kelp DAO’s rsETH token.
Plaintiffs in older terrorism-related cases now seek the funds. They claim the exploit involved North Korea’s Lazarus Group and argue the assets can help satisfy court judgments.
Aave argues the plaintiffs have not proven ownership rights over the recovered ether. The platform says their case relies on unverified allegations rather than direct evidence. The company also says stolen assets do not legally become the property of thieves. Therefore, Aave argues, alleged links to sanctioned actors would not transfer ownership from victims to attackers.
The original exploit allowed attackers to use unbacked collateral to borrow about $230 million in ether from Aave users. Arbitrum later intercepted part of the stolen funds and isolated them for recovery.
That recovered portion was expected to support restitution for affected users. The broader recovery effort has since grown into DeFi United, which has raised more than 137,700 ETH for impacted participants.
The restraining notice came from Gerstein Harrow on Friday. The firm says its clients hold more than $877 million in default judgments against North Korea. Gerstein Harrow argues the hackers behind the Kelp DAO exploit were North Korean operatives. On that basis, the firm says its clients have a legal right to the frozen ether.
Aave’s legal team rejected that position. The filing described the North Korea link as “conjecture from posts on the internet,” not established proof.
The firm also pushed back against the core legal theory. It said a thief does not gain ownership of property simply by taking it.
Read More: Aave Faces Bad Debt Risk After $293M Kelp DAO Exploit: Two Scenarios Emerge
The filing asks the court to lift the freeze. Alternatively, Aave wants the plaintiffs to post a bond of at least $300 million to cover possible damages. Legal experts say the case could shape how courts handle digital assets in cross-border disputes involving cybercrime, sanctions, and victim restitution.
The dispute also shows the growing legal complexity in decentralized finance. Recovery efforts now often involve protocols, blockchain networks, affected users, and courts. At the same time, regulators and judges continue to assess how digital assets should move through legal claims. Cases involving alleged state-backed hackers add another layer to that process.
Cross-chain bridges remain frequent targets as they connect assets across different blockchains. Their technical complexity has made them a recurring weak point across the sector.
DeFi platforms allow users to lend, borrow, and trade without traditional intermediaries. Yet major exploits continue to test how quickly protocols can recover funds and protect users.
Aave’s emergency motion challenges the freeze on $73 million in ETH tied to the Kelp DAO exploit. The case centers on victim restitution, ownership rights, and North Korea-linked claims. Its outcome may shape how courts handle recovered crypto assets in future DeFi disputes.
