US Court Allows 30,766 ETH Tied to Kelp DAO Hack to Move to Aave, Ownership Fight Continues

A US court has allowed some of the funds frozen after the Kelp DAO hack to be moved, but the legal dispute over ownership of the assets is still continuing.

The Block reported on May 10 that Judge Margaret Garnett of the US District Court for the Southern District of New York partially relaxed a freeze order covering 30,766 ETH tied to the Arbitrum DAO. The ruling allows the assets to be transferred to an Aave wallet through an on-chain governance vote.

The court made clear that the decision does not determine final ownership of the assets. While Aave holds the funds, it will remain subject to the existing freeze order and could be required to return the assets depending on the outcome of the case.

The ruling came in response to an emergency motion by Aave seeking relief from the freeze. Instead of lifting the order entirely or requiring a bond, the court adopted a compromise that allows part of the asset recovery process to move forward.

The court also resolved a separate dispute over the liability of governance participants. It said those taking part in the on-chain vote to authorize the transfer would not be treated as violating the freeze order. The Arbitrum community approved the move, with about 182.2 million ARB tokens voting in favor.

The case is tied to last month's roughly $292 million Kelp DAO hack. The plaintiffs argue the funds are linked to Lazarus Group, the North Korean hacking organization, and are seeking seizure of the assets.

Aave, meanwhile, argues the funds belong to users harmed by the hack and should be returned to them. The court has deferred a final ownership ruling as the two sides continue to press competing claims.

The 30,766 ETH is currently regarded as part of funds associated with DeFi United, a decentralized-finance recovery project. Final disposition of the assets will be decided in further proceedings.