# Arbitrum Cleared to Move $71M in Kelp Exploit Funds to Aave **Published:** 2026-04-21T06:00:00.000Z **Topic:** Crypto Lending **Sentiment:** neutral **Publisher:** TrendWatcher — https://www.trendwatcher.in/article/dc4b93ca-bb28-4358-ad42-e96b855c7093 A Manhattan federal judge authorized the transfer of 30,766 ETH to Aave to aid victims of the $292M Kelp DAO exploit, despite claims from terrorism victims. A Manhattan federal judge has authorized the transfer of approximately 30,766 ETH, valued at $71 million, from the Arbitrum network to a wallet managed by the Aave protocol [1]. The ruling by U.S. District Judge Margaret M. Garnett allows the Arbitrum DAO to proceed with an on-chain governance vote to relocate the funds, which were previously immobilized by a restraining notice [1]. The assets were frozen by the Arbitrum Security Council following the April 18 exploit of Kelp DAO’s rsETH token, an incident that resulted in losses estimated at $292 million [1]. Industry analysts have linked the hack to the Lazarus Group, a cyber operation tied to North Korea [1]. The transfer is a central component of a broader DeFi recovery effort, with stakeholders pledging over $314 million to compensate affected users [1]. The legal conflict arose on May 1, when legal representatives for families holding $877 million in default judgments against North Korea served a restraining notice on the Arbitrum DAO [1]. The plaintiffs argued that because the assets were allegedly stolen by North Korean hackers, the funds could be subject to their enforcement actions [1]. Aave challenged this in court, filing an emergency motion to vacate the notice [3]. Aave’s lawyers argued that stolen property does not grant ownership rights to thieves and warned that the delay threatened to destabilize DeFi markets by impacting collateral and liquidity [1]. Judge Garnett’s order permits the transfer to Aave, which has committed to honoring the existing restrictions on the assets [1]. While the ruling facilitates the recovery process, it explicitly preserves the underlying legal claims, meaning the dispute over ownership remains unresolved [1]. The court deferred decisions on the broader merits of the case, ensuring that the transfer does not prejudice future arguments regarding the North Korean connection or the plaintiffs' claims [1]. The Kelp DAO exploit created a significant shortfall in the backing of rsETH, with a gap of roughly 76,127 tokens [3]. Proponents of the transfer argue that returning the $71 million to Aave is a necessary step to stabilize the protocol and provide partial restitution to victims [3]. The case highlights the friction between decentralized governance and traditional judicial processes, as courts grapple with how to handle assets linked to state-sponsored cyber activity. Whether these funds will ultimately remain with the victims or be redirected to satisfy unrelated terrorism judgments remains an open question that could set a precedent for future DeFi asset recovery efforts [1]. ## Sources 1. Crowdfund Insider — [Federal Court Authorizes Aave Transfer of $71M ETH from Arbitrum, Preserving Legal Claims Tied to Suspected North Korean Hack](https://www.crowdfundinsider.com/2026/05/278344-federal-court-authorizes-aave-transfer-of-71m-eth-from-arbitrum-preserving-legal-claims-tied-to-suspected-north-korean-hack/) 2. CoinTelegraph — [Aave files emergency motion to lift restraining notice on frozen ETH](https://cointelegraph.com/news/aave-asks-court-to-lift-restraining-notice-on-frozen-kelp-exploit-ether) 3. CoinTelegraph — [Court lets Arbitrum DAO transfer $71M in ETH tied to North Korea hack to Aave](https://cointelegraph.com/news/court-lets-arbitrum-dao-to-transfer-71m-in-eth-tied-to-north-korea-hack-to-aave) --- Cite as: TrendWatcher, "Arbitrum Cleared to Move $71M in Kelp Exploit Funds to Aave", https://www.trendwatcher.in/article/dc4b93ca-bb28-4358-ad42-e96b855c7093