Aave filed an emergency motion in New York district court on May 4 to lift a restraining notice freezing 30,766 Ethereum tied to the April 18 Kelp DAO hack, demanding law firm Gerstein Harrow LLP post a $300 million bond to keep the assets locked. The frozen ETH, valued at $71 million at current prices, sits in Arbitrum DAO’s control after a community vote was interrupted by the restraining order. Aave argues the legal premise underpinning the freeze is fundamentally flawed: Gerstein Harrow claims its clients hold judgments against North Korea and that the Kelp hackers were North Korean operatives, but Aave characterizes this attribution as “conjecture from posts on the internet” rather than established fact.
The Kelp Hack and the Legal Claim Chain
On April 18, attackers drained $292 million from Kelp DAO in one of 2026’s largest DeFi exploits. Gerstein Harrow, representing judgment creditors, filed a restraining notice on May 1 claiming its clients have valid legal claims against North Korea and that the Kelp hackers are North Korean state actors. Under this theory, frozen funds derived from the hack could satisfy existing judgments. Aave’s core counterargument is direct: “A thief does not gain lawful ownership of stolen property simply by taking it.” The law firm’s North Korea attribution remains unproven in court. No judge has ruled on the motion, and no hearing date has been scheduled.
Market Impact and the Arbitrum Community Vote
The restraining notice arrived as Arbitrum DAO was voting to release frozen ETH to DeFi United, a coordination effort for Kelp victim compensation. That vote closes May 7, but the legal freeze now blocks any asset movement. The $71 million in frozen Ethereum represents a fraction of the $292 million total hack losses, but the legal deadlock threatens to paralyze recovery efforts. Aave warned in its filing that prolonged asset freezes could destabilize DeFi market confidence. Gerstein Harrow’s clients claim $877 million in aggregate default judgments, far exceeding the frozen ETH pool.
North Korea Attribution and Unresolved Liability
The restraining notice hinges entirely on Gerstein Harrow’s assertion that Kelp hackers are North Korean operatives. Aave disputes this connection as unsubstantiated. The law firm’s clients hold pre-existing judgments against North Korea, unrelated to the Kelp hack, and are attempting to attach frozen assets to satisfy those claims. This legal maneuver—linking an unrelated judgment to a contemporary hack—creates the core dispute. Courts have not yet evaluated whether the North Korea attribution meets evidentiary standards or whether judgment creditors can claim priority over actual Kelp victims.
Next Steps and Unresolved Variables
Aave’s $300 million bond demand is designed to raise the cost of maintaining the freeze pending judicial review. The emergency motion seeks immediate relief, but the court’s timeline remains unclear. Arbitrum DAO’s May 7 vote outcome will not be enforceable until the restraining notice is lifted. The outcome of Aave’s motion will determine whether frozen assets flow to Kelp victims or remain locked in legal limbo while Gerstein Harrow’s North Korea theory is tested.
