Ethereum Freeze Battle Intensifies As Aave Seeks Restraining Notice Lift

A $300 million bond demand is now at the center of a legal fight over 30,766 Ethereum frozen in the wake of April’s Kelp DAO hack — and a New York court will decide whether the funds stay locked or flow to victims.

DeFi Protocol Takes Legal Action

Aave filed an emergency motion in a New York district court Monday, asking a judge to throw out a restraining notice that has blocked the Arbitrum DAO from moving the frozen Ethereum.

If the court won’t act immediately, Aave’s lawyers want the law firm behind the notice — Gerstein Harrow LLP — to post a $300 million bond just to keep the freeze in place. No hearing date has been scheduled. A judge has not yet ruled.

Aave LLC has filed an emergency motion to vacate a restraining notice served on Arbitrum DAO on May 1, 2026 that attempts to seize approximately $71 million in ETH belonging to victims of the April 18 exploit.

A thief does not gain lawful ownership of stolen property simply by… pic.twitter.com/NwgKIdU1L7

— Aave (@aave) May 4, 2026

The restraining notice was served by Gerstein Harrow on Friday. The firm argues its clients hold more than $877 million in default judgments against North Korea and that the hackers behind the Kelp exploit were North Korean operatives. Based on that claim, the firm says its clients have a legal right to the frozen assets.

Aave’s legal team pushed back hard. A thief, they said, does not acquire ownership of property simply by taking it. They also challenged the core premise of Gerstein Harrow’s argument — that North Korea carried out the hack — calling it “conjecture from posts on the internet” rather than established fact.

Victims Waiting As Arbitrum DAO Votes

The Kelp DAO hack took place on April 18, 2026 and resulted in losses of roughly $292 million. In the weeks since, the Arbitrum DAO has been weighing a proposal to release the frozen ETH to DeFi United, a coordination effort aimed at making rsETH holders whole and restoring the token’s backing. That vote closes May 7.

Gerstein Harrow’s restraining notice arrived just days before the deadline, halting any transfer while the legal question is sorted out. Reports indicate the notice effectively placed Arbitrum DAO in a legal bind — it cannot move the funds without risking contempt, even as the community vote moves forward.

Aave argued the delay is causing damage that money cannot fix. Users whose frozen assets were being used as loan collateral on other platforms may not be able to meet those obligations while the Ethereum sits locked.

According to court filings, Aave warned that continued restraint could destabilize the wider DeFi market, not just the Kelp victims.

This is not the first time Gerstein Harrow has pursued this kind of case. The firm has filed similar restraining actions tied to assets from the 2023 Heco Bridge hack and the 2025 Bybit exploit, each time arguing that frozen funds linked to North Korean hackers should flow to its clients rather than to affected users or platforms.

Featured image from Unsplash, chart from TradingView