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In a major decision that preempts a potentially messy liability debate over stolen crypto assets, a federal judge has cleared 
Arbitrum DAO to move $70M in frozen ETH tied to the KelpDAO exploit to 
Aave LLC.
What's the Scoop?
- Latest Ruling: On Friday, United States District Judge Margaret M. Garnett ruled that Arbitrum can lawfully transfer the 30,765 ETH (~$70M) it seized from KelpDAO's suspected North Korean exploiters to a digital wallet controlled by Aave LLC without violating a court-ordered restraining order pertaining to the frozen funds.
- First Step: Also on Friday, Arbitrum DAO approved via
Snapshot the release of seized Kelp DAO funds to Aave, the second milestone in the DAO’s lengthy “Constitutional AIP” governance process, which is expected to take at least another 30+ days before the funds can ultimately be transferred. - Case Context: Earlier this month, lawyers representing the victims of North Korean terror (who are owed hundreds of millions of dollars in unrecovered court-awarded damages) notified Arbitrum DAO that they had obtained a restraining order for the frozen ETH, targeting seized assets which had momentary fallen under the control of suspected DPRK hackers.
- Ongoing Issue: Aave LLC has agreed to remain bound by the restraining order, until or unless the order is vacated or further modified. Although the lending market may soon take custody of the stolen ETH, a payout of these fund specifically remains conditional on a favorable final court outcome.
Update on KelpDAO/Arbitrum SDNY case:
— Nick Bax.eth (@bax1337) May 9, 2026
Judge ruled that Arbitrum DAO can transfer the rescued ~$71M to multisig that Aave and others are on, taking Arbitrum out of the line of fire and keeping Defi United remediation on schedule. pic.twitter.com/6AoXw3xVdp
