Decentralized finance protocol Aave filed an emergency motion on Monday in New York to vacate a restraining notice from US law firm Gerstein Harrow LLP. The notice aims to block Arbitrum DAO from transferring 30,766 Ether to victims of the Kelp exploit.
Aave Files Emergency Motion to Lift Restraining Notice
Aave argued that a thief does not gain lawful ownership of property by stealing it. The protocol also said Gerstein Harrow’s legal argument “defies logic, common sense and the law.” The law firm served Arbitrum DAO with a restraining notice on Friday, claiming its clients are owed over $877 million in default judgments against North Korea.
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Gerstein Harrow argues that the North Korean hacker group behind the Kelp exploit had possession of the tokens. This, the firm claims, gives its clients a legal claim over the Ether. But Aave’s lawyers countered that North Korea is only suspected of being part of the theft. The case is based on unsupported conjecture, they said.
The Arbitrum DAO has been voting on whether to release the Ether. The funds would assist DeFi United, an industrywide effort to make rsETH holders whole. The goal is to restore rsETH’s backing after the $292 million Kelp DAO hack on April 18. Voting ends May 7.
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Legal Arguments and Implications for DeFi
Aave’s lawyers warned that the delay is causing “irreparable harm” to the protocol, its users, and the wider DeFi community. “None of which can be later cured by monetary damages,” they said. If the court upholds Gerstein Harrow’s notice, it could deter future recovery efforts for North Korea-related hacks.
The implication is that bad actors might target more crypto protocols. Aave’s lawyers stated: “If the immobilized assets remain subject to a freeze and are not made available to restore value to Aave protocol users, the entire DeFi ecosystem risks being destabilized.”
They further argued that Aave protocol users cannot retrieve their assets from the protocol. But if those assets were used as collateral for other positions, the continued restraint may render those users unable to meet their collateral obligations.
Gerstein Harrow’s Legal History
Gerstein Harrow has filed similar cases in the past. The firm argued its clients have a claim to funds stolen by North Korea and frozen by crypto firms. This includes assets from the 2023 Heco Bridge hack and the 2025 Bybit exploit. Industry watchers note that this pattern could signal a broader legal strategy targeting frozen crypto assets.
What This Means for the Crypto Ecosystem
Data from Aave’s filing shows that the protocol is seeking immediate relief. If the court cannot vacate the notice right away, Aave’s lawyers request that Gerstein Harrow pay a $300 million bond. This bond would maintain the restraining notice until a decision is reached.
A judge has not ruled on the emergency motion yet. A hearing date has not been scheduled. This leaves the frozen Ether in legal limbo.
What this means for investors is that legal uncertainty continues to plague the DeFi sector. The case could set a precedent for how courts handle stolen crypto assets. It also highlights the tension between recovery efforts and legal claims from third parties.
Conclusion
Aave’s emergency motion to lift the restraining notice on frozen ETH from the Kelp exploit represents a critical legal battle. The outcome could affect future recovery efforts for hacks linked to North Korea. It also underscores the need for clear legal frameworks in the crypto industry.
FAQs
Q1: What is the Aave emergency motion about?
Aave filed an emergency motion to vacate a restraining notice from Gerstein Harrow LLP. The notice blocks Arbitrum DAO from transferring 30,766 Ether to victims of the Kelp exploit.
Q2: Why did Gerstein Harrow serve the restraining notice?
The law firm claims its clients are owed over $877 million in default judgments against North Korea. It argues the North Korean hacker group behind the Kelp exploit had possession of the tokens.
Q3: What is Aave’s main legal argument?
Aave argues that a thief does not gain lawful ownership of property by stealing it. It also says the law firm’s claim is based on unsupported conjecture about North Korea’s involvement.
Q4: What happens if the court upholds the restraining notice?
Aave warns it could deter future recovery efforts for North Korea-related hacks. It could also incentivize bad actors to target more crypto protocols.
Q5: Has a judge ruled on the emergency motion?
No, a judge has not ruled yet. A hearing date has not been scheduled.
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