Aave files motion to unfreeze 30,766 ETH in ownership dispute

DeFi protocol Aave has filed an emergency motion to lift a restraining order on 30,766 ETH, arguing the order is based on a flawed interpretation of property law following the April 18 Kelp DAO exploit.

"The immobilized assets do not belong to North Korea or any affiliated entities," Aave's lawyers stated in the court filing. "Instead, the immobilized assets belong to the users of the Aave protocol who were victimized when a third-party thief effectively stole their assets."

The restraining notice was initiated by law firm Gerstein Harrow, which claims its clients hold approximately $877 million in default judgments against North Korea. The firm asserts that the stolen ETH belongs to the nation-state, a claim Aave's legal team described as being based on "conjecture from posts on the internet" and one that "defies logic, common sense and the law."

The outcome of the motion, along with a parallel Arbitrum DAO vote ending May 7 on releasing the funds, could set a critical precedent for how stolen assets are recovered within the DeFi ecosystem, potentially impacting future recovery efforts for hacks attributed to state-sponsored actors.

The Core Legal Challenge

Aave's central argument rests on a foundational principle of property law: theft does not transfer legal title. The protocol's lawyers contend that even if the identity of the hacker were confirmed, the act of stealing the assets does not make the thief the rightful owner. Upholding the restraining notice, Aave warns, could destabilize the DeFi ecosystem and cause "irreparable harm" to users whose assets may be tied up in related collateral obligations.

The protocol has asked the court to vacate the notice immediately. If the court declines, Aave has requested that Gerstein Harrow be required to post a $300 million bond to maintain the freeze, a measure intended to cover potential damages caused by the continued immobilization of the assets.

Community Recovery Efforts vs. Legal Claims

The legal battle runs parallel to a community-led recovery effort. The Arbitrum DAO is currently holding a vote, set to conclude on May 7, on whether to transfer the 30,766 ETH to DeFi United, a coalition formed to make victims of the Kelp DAO hack whole. The vote highlights the tension between decentralized governance mechanisms and traditional legal systems in resolving disputes over stolen funds.

This is not Gerstein Harrow's first attempt to recover funds through such means. The law firm has previously filed similar claims in cases linked to the 2023 Heco Bridge hack and the 2025 Bybit exploit, building a track record of pursuing assets allegedly stolen by North Korean-affiliated groups on behalf of clients with judgments against the country.

The court has not yet scheduled a hearing for Aave's emergency motion. The decision will be closely watched, as it could either reinforce traditional ownership laws within the context of digital assets or create new, complex challenges for protocols attempting to recover funds after a security breach.

This article is for informational purposes only and does not constitute investment advice.