New York Court Delays Ruling on Aave Bid to Unfreeze $71 Million in Ether, Sets June 5 Hearing

A New York court has postponed a decision on Aave's request to unfreeze Ether valued at about $71 million.

Cointelegraph reported on May 13 that Judge Margaret M. Garnett of the U.S. District Court for the Southern District of New York ordered additional submissions on Aave's emergency motion to lift the freeze. The next hearing is set for June 5.

Aave had asked the court to let it use the Ether, which Arbitrum froze, to help address losses from the recent Kelp DAO hack. The attack caused about $293 million in damage and ranks as the largest DeFi hack so far this year.

The dispute centers on competing claims to the funds. Earlier in May, Gerstein Harrow LLP filed for a preliminary injunction, arguing that its clients have rights to the assets and seeking to block any withdrawal of the Ether. Aave then filed an emergency motion to lift the freeze, arguing that a prolonged lockup could hamper relief for affected users and destabilize the DeFi market.

Garnett found Aave's arguments lacking. In particular, she said filings the company submitted earlier in May did not sufficiently explain how keeping the Ether frozen would cause users to suffer losses from foregone compounding.

The judge did acknowledge the risk of short-term harm. "I recognize the risk of short-term harm to Aave protocol users," Garnett said. "Given the complexity of the issues, and the compressed schedule for oral arguments on May 6 and related filings, I am ordering additional written submissions."

Under the court's order, Aave and Gerstein Harrow must file additional briefs by May 22.