United States District Judge Margaret M. Garnett signed a court order to allow an onchain governance vote to transfer the 30,765 frozen ETH from the ArbitrumDAO to a wallet controlled by Aave LLC. The order provides explicit legal cover for ArbitrumDAO participants: any party initiating, voting on, or participating in the onchain transfer to Aave LLC is not in violation of the restraining notice served by Gerstein Harrow LLP on May 1st.

The restraining notice transfers with the assets. Aave LLC has agreed to abide by the terms of the restraining notice as if it had been issued directly to Aave LLC, until the court vacates it, the plaintiffs withdraw it, or it expires by operation of law. The judge did not rule on whether the plaintiffs actually have a valid legal claim to the funds. The order helps move the DeFi United recovery effort forward towards restoring the backing of rsETH.

The ruling clears the legal path for the transfer authorized by ArbitrumDAO's recovery vote. The approval of the Mantle DAO loan to Aave and Aave's earlier liquidation of attacker rsETH positions brings DeFi United one phase closer to completion.

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ArbitrumDAO approved a temperature check vote to release 30,765.67 ETH frozen by the Arbitrum Security Council following the April 18 KelpDAO exploit. The vote passed on May 7 with 90.96% in favor and effectively no opposition.

The frozen ETH was seized from the exploiter on Arbitrum One on April 21 and moved to a protocol-controlled address pending a governance decision on its destination. This proposal routes those funds into the coordinated DeFi United recovery effort, a 3-of-4 multisig controlled by signers from Aave Labs, KelpDAO, EtherFi, and Certora.

The funds will be applied toward restoring rsETH's backing. The next steps involve a 3-day voting delay once the vote is submitted for onchain execution, a 14-day vote, an 8-day L2 waiting period, a 1-week L1 message finalization, and a final 3-day L1 waiting period before execution. In total, approximately 42 days remain before the transfer is fully executed.

Disclaimer: Content is for informational and educational purposes only and does not constitute financial, investment, legal, or other professional advice. No representations or warranties are made as to accuracy, completeness, or timeliness. Use of this content is at your own risk, and you should consult a qualified professional before making decisions. No fiduciary or advisory relationship is created

On May 4, Aave LLC fired back with an emergency motion to vacate the restraining notice in the SDNY court. Aave argues that a thief does not gain legal title to stolen property simply by taking it. The ETH belongs to Kelp DAO victims and downstream DeFi users, not to North Korea, and therefore not to Gerstein Harrow's clients.

Aave is also requesting that if the restraining notice is not vacated, Gerstein Harrow's clients be required to post a $300M bond to cover damages to the hack victims. The DAO vote to transfer funds to a recovery multisig, which previously had near-unanimous support, could remain legally blocked pending the court's decision.

Disclaimer: Content is for informational and educational purposes only and does not constitute financial, investment, legal, or other professional advice. No representations or warranties are made as to accuracy, completeness, or timeliness. Use of this content is at your own risk, and you should consult a qualified professional before making decisions. No fiduciary or advisory relationship is created