Aave Asks Court to Vacate $71 Million Crypto Seizure Order Tied to North Korea

The dispute stems from an April 18, 2026, cross-chain exploit involving Kelp DAO. The attacker minted unbacked rsETH and borrowed about $293 million from Aave. The Arbitrum Security Council subsequently froze 30,766 ETH worth about $71 million. Victims holding an outstanding $877 million judgment against North Korea claim the funds are linked to Lazarus Group and can be used to satisfy the judgment.

Aave asked the U.S. District Court for the Southern District of New York on May 4, 2026, to vacate the seizure notice, arguing that the assets belonged to innocent users and that a continued freeze could trigger liquidations. Judge Margaret Garnett on May 8 allowed the ETH to be moved to an Aave wallet following an Arbitrum on-chain vote, though the creditors’ claims would remain attached to the assets. On May 14, the court ordered both sides to file supplemental materials by May 22 and postponed the hearing until June 5.