Judge approves $71M ETH transfer to Aave for rsETH recap
Judge Margaret Garnett authorized transfer of about 30,765 ETH (~$71M) to an Aave-controlled wallet on May 9, lifting a restraining order and enabling rsETH bridge recapitalization.
On May 9 U.S. federal Judge Margaret Garnett signed an order modifying a prior asset freeze to allow the transfer of approximately 30,765 ETH, valued at about $71 million, to a wallet controlled by Aave LLC. The order lifts restraints on the funds and shields participants in an onchain governance vote that approved the transfer from personal liability under the prior restraining notice.
The funds were frozen after an April 18 exploit of KelpDAO’s cross-chain bridge. Attackers used unbacked rsETH tokens as collateral on Aave V3 markets to borrow roughly $230 million in ETH. The Arbitrum Security Council froze the 30,765 ETH that remained in the bridge immediately after the attack.
Attorney Charles Gerstein, representing families holding about $877 million in unpaid terrorism judgments against North Korea, moved to block the transfer. Gerstein argued the frozen funds should be subject to seizure because investigators and some in the community have attributed the exploit to the Lazarus Group, a North Korean state-linked hacking collective. Judge Garnett’s order addresses that claim and permits the transfer.
The released ETH is planned for use to recapitalize the rsETH bridge and restore the 1:1 backing between rsETH and the underlying ETH collateral. Aave co-founder Stani Kulechov confirmed on May 9 that ETH loan-to-value ratios on Aave are returning to normal as the recapitalization begins.
In the weeks after the exploit, five major decentralized finance protocols petitioned the Arbitrum DAO to release the frozen ETH. A coalition called DeFi United raised about $160 million to help cover Aave’s bad debt created by the borrowed funds. The 30,765 ETH represents the portion of assets that remained locked in the bridge and was designated to back rsETH.
Judge Garnett’s order removes the principal legal barrier to executing the coordinated recovery plan that began after the April 18 incident. The recovery effort combined onchain governance, coordination among protocols, private fundraising and litigation over attribution and asset seizure.
The material on GNcrypto is intended solely for informational use and must not be regarded as financial advice. We make every effort to keep the content accurate and current, but we cannot warrant its precision, completeness, or reliability. GNcrypto does not take responsibility for any mistakes, omissions, or financial losses resulting from reliance on this information. Any actions you take based on this content are done at your own risk. Always conduct independent research and seek guidance from a qualified specialist. For further details, please review our Terms, Privacy Policy and Disclaimers.
Articles by this author
