Federal Judge Clears Path for $71M ETH Transfer in North Korea-Linked Hack

A federal judge has given Arbitrum DAO permission to transfer $71 million in frozen Ether (ETH) to Aave, a move aimed at recovering losses from a recent exploit linked to North Korea. The ruling modifies an earlier restraining notice that had locked the assets under Arbitrum DAO's control, allowing for the funds to be sent to a wallet managed by Aave LLC.

The decision is seen as a step forward in addressing the financial damage caused by the Kelp DAO exploit, which resulted in a loss of 116,500 rsETH tokens and created a shortfall worth approximately $174.5 million. The transfer requires an onchain governance vote to be finalized, but Arbitrum DAO delegates have already approved it via an off-chain Snapshot vote.

The case highlights the legal complexities surrounding crypto assets tied to illicit activities. Gerstein Harrow LLP, representing families with $877 million in unpaid terrorism judgments against North Korea, had previously opposed the transfer, arguing that the stolen funds belonged to their clients due to the nature of the hack. Aave countered that stolen property cannot legally belong to thieves and warned that prolonged freezes could deter future DeFi recovery efforts.