Arbitrum delegates have signaled strong support for a plan to release $71 million in ether frozen after last month's Lazarus-linked rsETH exploit, even as a US court fight over ownership of the funds escalates.
A non-binding sentiment check closed Friday with more than 90% approval for releasing 30,765 ETH frozen by Arbitrum's Security Council following the April 18 attack, when hackers used unbacked rsETH tokens as collateral on Aave to borrow roughly $230 million in ETH.
The frozen funds are earmarked for a coordinated recovery effort led by Aave, KelpDAO, LayerZero, EtherFi, and Compound to make affected users whole. But the same assets are at the center of a legal dispute in Manhattan federal court, where families holding $877 million in terrorism judgments against North Korea claim the ETH is Pyongyang's property.
Aave has moved to vacate a restraining notice, warning that continued delays risk "cascading liquidations" across DeFi markets. Arbitrum's governance process requires a separate onchain proposal and an eight-day withdrawal delay before any transfer, potentially giving the court time to intervene.
Speaking at Consensus Miami, Aave Labs Chief Legal and Policy Officer Linda Jeng said the exploit forced the protocol to rethink its risk framework, expanding collateral standards beyond financial metrics to include cybersecurity and interoperability.