Judge Delays Aave's Request to Unlock Frozen ETH Funds

A federal judge has put on hold Aave's request to release $71 million in frozen Ethereum (ETH) funds, amidst ongoing efforts to recover assets linked to the April 2026 KelpDAO exploit.

The ruling by Judge Margaret M. Garnett comes as Aave and other stakeholders work to resolve the complex case, which involves a novel sanctions enforcement claim with no precedent in U.S. courts.

According to court documents, the KelpDAO exploit resulted in approximately $292 million being fraudulently minted in unbacked rsETH, triggering severe collateral risk across Aave's lending markets and causing over $7 billion in temporary DeFi TVL outflows.