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.

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Gerstein Harrow LLP, a U.S.-based law firm, filed a restraining notice against Arbitrum DAO in the U.S. District Court for the Southern District of New York, aiming to claim the funds from victims of the KelpDAO exploit. The order blocks the transfer of the 30,766 ETH frozen in Arbitrum's governance wallet.

The firm argues that because the Kelp exploit has been attributed to North Korea's Lazarus Group, the recovered funds constitute DPRK-linked property and therefore can be seized to satisfy a decade-old default judgment for its clients.

Crypto crime investigator ZachXBT called the move "pure evil," describing the firm as predatory. Gerstein Harrow is the same firm behind the notorious PoolTogether lawsuit, in which an Elizabeth Warren staffer sued the savings protocol after depositing just $10. PoolTogether ultimately won the lawsuit in 2023.

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

LayerZero published a statement claiming the $290 million KelpDAO exploit stemmed from a sophisticated RPC-poisoning attack that manipulated its DVN's verification process. It attributed the attack to the TraderTraitor subgroup of North Korea's Lazarus Group. According to LayerZero, the attackers compromised RPC nodes and fed forged data directly to the DVN while masking activity from monitoring systems.

LayerZero Labs placed responsibility on KelpDAO, arguing its 1-of-1 DVN configuration enabled the exploit, even though LayerZero's own DVN was the sole verifier KelpDAO relied on. LayerZero stated that it will no longer support single-DVN setups. The company also did not outline any intentions to compensate impacted users. Aave subsequently froze WETH and LST markets as the exploit rippled through DeFi.

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