Aave Seeks Release of $73 Million in Frozen Ether, Says Funds Belong to Kelp DAO Hack Victims

Aave, the decentralized finance protocol, is seeking the release of Ether frozen in connection with the Kelp DAO hack.

The Block reported on May 4 that Aave LLC filed an emergency motion in US federal court to unfreeze about $73 million of Ether. The assets were recovered after the Kelp DAO hack last month.

On May 1, the court ordered restrictions on the movement of assets recovered by Arbitrum DAO. The order followed a bid by plaintiffs holding unpaid judgments linked to North Korea to claim the assets as compensation.

Aave pushed back on the allegation that North Korea's Lazarus Group was behind the hack, arguing that claim has not been proven. It also said that even if the group had been involved, temporary possession of the assets would not amount to ownership.

Aave founder Stani Kulechov said a thief cannot become the owner of stolen assets. The funds, he said, belong to the victims of the hack.

The case stems from an exploit of a vulnerability in a cross-chain bridge tied to Kelp DAO's rsETH that resulted in the theft of about $230 million in Ether. Arbitrum later recovered and froze 30,766 ETH, which had been slated for use in compensating victims.

The industry has since broadened recovery efforts through a joint response called DeFi United, securing an additional 137,700 ETH, or about $327 million.

Aave asked the court to lift the freeze or require a bond of at least $300 million, arguing that keeping the assets frozen could delay compensation for victims.