Leading decentralized lending platform Aave has asked a U.S. federal court to block an attempt by victims of North Korean terrorism to seize about $71 million in crypto frozen after last month’s rsETH exploit.
The filing, submitted in the Southern District of New York, seeks to vacate a restraining notice served on Arbitrum DAO. Aave argues the assets belong to users of its protocol, not North Korea, and warns that keeping them frozen risks irreparable harm to the platform and the broader DeFi ecosystem.
At the center of the fight is 30,765 ETH that Arbitrum’s Security Council froze after the April exploit, when attackers used improperly valued rsETH as collateral on Aave. Some of those funds were later intercepted on Arbitrum, with plans to return them to affected users.
The dispute centers on whether stolen property briefly held by hackers becomes their legal property. The plaintiffs, judgment creditors holding $877 million in damages awards against North Korea, argue it does. Aave's lawyers call that theory flatly wrong.
Aave is asking the court to immediately lift the restraining notice, warning it could deepen losses and destabilize DeFi markets already strained by the exploit.