#GateSquareMayTradingShare Courts have reopened the case for the $71 million worth of ETH frozen after the Kelp DAO hack. Aave has filed an emergency petition in a New York federal court requesting the return of these funds to their users.

The events unfolded as follows: After the $292 million rsETH exploit on April 18, the Arbitrum Security Council successfully froze 30,766 ETH related to the attacker. Just as these funds were about to be returned to the victims, the U.S. law firm Gerstein Harrow LLP intervened. Citing total damages from terrorism valued at $877 million awarded to North Korea in 2010, 2015, and 2016, the firm filed for a restraining order on May 1. Their claim was that the attack was allegedly linked to the Lazarus group, and therefore the frozen assets should be considered North Korean property.
Aave’s lawyers strongly opposed this claim. The petition clearly states, "A thief does not become the lawful owner of stolen goods just because he holds them for a few hours," emphasizing that North Korea’s claim is based on internet rumors and lacks concrete evidence. Aave also warned that if this restraining order continues, protocol users may be unable to meet their collateral obligations, and the risk of chain liquidation could threaten the entire DeFi ecosystem. They requested the court to immediately lift the restraining order, or if not possible, that the parties involved deposit a collateral of $300 million. An emergency hearing is scheduled for tomorrow.
This case marks the first time in DeFi that the question of ownership of hacked funds has been brought before a court. Whatever the outcome, it will set a precedent that determines the fate of all future recovery efforts.
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