Aave launches binding Arbitrum vote to move $71M in disputed ETH

Aave has initiated a binding on-chain governance vote on Arbitrum to transfer approximately 30,766 ETH (roughly $71 million) that were frozen after the April rsETH exploit, following a U.S. federal judge’s limited modification of the restraining order.

The funds were immobilized after the KelpDAO-related exploit; Arbitrum’s Security Council froze the attacker-controlled address and the Arbitrum community previously signaled strong off-chain support for sending the frozen ETH to Aave as part of a recovery plan. Judge Margaret Garnett’s order, issued in the Southern District of New York, permits an on-chain transfer while explicitly preserving third-party legal claims on the assets.

Execution still requires a formal binding vote by Arbitrum delegates and compliance by Aave with the court’s conditions. The court’s modification protects participants in the governance process from breaching the restraining notice, but it also binds Aave to the same legal constraints after receipt, meaning the protocol cannot use the funds freely until competing claims are resolved.

Broader legal pressure comes from plaintiffs representing families awarded default judgments against the Democratic People’s Republic of Korea (North Korea), who have asserted a claim that the stolen funds can be applied toward roughly $877 million in unpaid terrorism judgments. That dispute adds a complex cross-border litigation element and underscores how traditional courts are increasingly intersecting with decentralized governance in high-value recoveries.

Market observers say the procedural outcome may set a precedent for how DAOs and DeFi recovery efforts interact with civil judgments and asset restraints. While the immediate market impact on ETH prices is expected to be limited, the case is likely to prompt tighter legal coordination and more conservative governance practices among major DeFi protocols as on-chain recovery becomes more legally contested.