Arbitrum DAO OKs $71M ETH transfer to Aave after North Korea hack

A Manhattan federal judge modified the restraining notice to allow the Arbitrum DAO to transfer $71M in frozen ETH to Aave in the North Korea–linked rsETH exploit case. Judge Margaret Garnett’s order enables an onchain governance vote to move the funds into a wallet controlled by Aave LLC, while preserving terrorism victims’ legal claim on the assets. Arbitrum delegates previously signaled support via an off-chain Snapshot vote as part of Aave’s broader recovery plan. However, the Arbitrum DAO transfer still requires a separate binding onchain vote before any funds move. Aave had sought to lift the freeze, arguing the stolen property can’t be treated as lawfully owned by the claimants and that attributing the hack to North Korea relies on speculative evidence. The claimants’ lawyers (Gerstein Harrow LLP) represent families with $877M in unpaid terrorism judgments and argue the stolen funds should be paid to them. Separately, the Kelp DAO exploit left a large rsETH backing gap: about 116,500 rsETH were released on Ethereum without a corresponding burn, leaving ~40,373 rsETH in the adapter contract versus confirmed backing of 152,577—an estimated ~$174.5M shortfall. Supporters view the $71M frozen ETH as an important step toward restoring rsETH backing and improving DeFi stability on Arbitrum. For traders, this is a litigation-driven catalyst for Arbitrum DAO governance and Aave-linked recovery, but execution risk remains until the binding Arbitrum onchain vote completes.