I. Cause of the Incident


Cause: On April 18th, Kelp DAO's cross-chain bridge vulnerability was exploited by hackers, who borrowed approximately $230 million worth of ETH from Aave without collateral.
Time and Location: On May 4th, Aave filed an emergency motion with the Southern District of New York federal court to unfreeze about $73 million worth of ETH. These funds are recovered assets, but the court approved their seizure on May 1st to compensate victims of North Korean terrorism.

II. Parties' Claims
Aave: The assets belong to users and should be returned to the original users. "Thieves do not own what they steal." Aave requests the funds to be unfrozen or demands the plaintiff to post at least $300 million in security to cover potential losses.
Plaintiff (North Korean terrorism victims): Claim that the attack was carried out by Lazarus Group, associated with North Korea, and attempt to characterize the incident as "fraud" rather than "theft," to justify seizing assets under the Terrorism Risk Insurance Act for compensation.

III. Legal Basis for Freezing
The court, based on the plaintiff's claims and under the Terrorism Risk Insurance Act (which allows for the confiscation of terrorist assets), approved the freezing of the funds.

IV. Aave's Litigation Strategy
Aave's core legal argument is that temporary possession of stolen assets does not equate to ownership. Additionally, Aave questions the unverified allegations of Lazarus Group's involvement.

V. Impact and Follow-up
Impact: The case will define future rules for the ownership of crypto assets, determining whether recovered assets are returned to the original users or used for other judgments.
Follow-up: The Arbitrum DAO's plan to transfer funds to a multi-party recovery contract was halted due to the freeze order, and the $327 million ETH raised by the "DeFi United" alliance is blocked from recovery.
A hearing is expected to be held by the end of May.

VI. Background
The U.S. Treasury is advancing the GENIUS Act to strengthen AML and sanctions compliance requirements for stablecoin issuers. The outcome of this case may set a precedent for future similar cases.

#Aave起诉要求解冻7300万美元ETH
ETH-2.41%
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