Aave and affected stakeholders have launched a binding on-chain Arbitrum governance vote to transfer 30,765 ETH — roughly $71 million — that was frozen after last month’s Kelp DAO exploit. The move comes via an amended Constitutional Arbitrum Improvement Proposal (AIP), the DAO’s formal mechanism for approving binding protocol actions, and implements a recent court order from Judge Margaret Garnett.
If the AIP is approved when voting opens on May 15, the proposal would move the immobilized ETH from the address where Arbitrum’s Security Council froze it into a wallet controlled by Aave LLC, as the court directed. Crucially, the assets would remain under strict legal restrictions: Aave LLC would not be free to spend, transfer, or deploy the funds unless and until a court permits it, and the proposal must respect any restraining notice sought by terrorism-judgment creditors.
The legal dispute has been complicated by blockchain-forensics attributions linking the exploit to North Korea’s Lazarus Group. Those attributions, reported by analytics firms and independent researchers, have not been established as legal findings in Arbitrum’s governance process or in the court case. Nevertheless, families holding roughly $877 million in unpaid U.S. terrorism judgments against North Korea have argued that if the ETH is ultimately tied to Pyongyang, it could be claimed to satisfy those awards — a contention Aave disputes. Aave maintains the ether belongs to users harmed in the hack, not to the attackers who briefly controlled it.
The disagreement has effectively pitted DeFi victims against terrorism creditors in a novel cross-border legal fight over who can claim control of frozen crypto. Parallel to the Aave proceedings, many of the same terrorism-judgment creditors have sued privacy protocol Railgun DAO, alleging it allowed allegedly North Korea-linked funds to move through its infrastructure instead of freezing them — part of a broader effort to pursue Pyongyang-linked crypto across decentralized finance.
Next step: the Arbitrum DAO vote on the amended AIP begins May 15. Even if it passes, the move to an Aave LLC-controlled address will be executed under the court’s constraints and any ongoing legal claims will remain active.
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