On May 4, Aave LLC filed a 29-page emergency motion in the US District Court for the Southern District of New York, asking Judge Margaret M. Garnett to vacate a restraining order that blocked 30,766 ETH — about $71 million — recovered from the attack on the Kelp DAO bridge on April 18. The motion, filed by Morrison Cohen LLP, gives the court three options: lift the order immediately, schedule an expedited hearing with a temporary stay, or — if the block remains in place — require the plaintiffs to post a cash bond of «at least $300 million» to cover damages caused by the continued delay.
Aave LLC filed an emergency motion to vacate a restraining order issued against Arbitrum DAO on May 1, 2026, which seeks to seize approximately $71 million in ETH belonging to victims of the April 18 attack. A thief does not acquire legal title to stolen goods merely because… pic.twitter.com/NwgKIdU1L7
— Aave (@aave) May 4, 2026
Motion: Repeal, Accelerate or Guarantee $300 Million
The plaintiffs are families who hold more than $877 million in unpaid damages in terrorism cases against the Democratic People’s Republic of Korea, with claims dating back to 2010–2016. They are represented by Gerstein Harrow LLP, which issued the restraining order on Arbitrum DAO on May 1 through the protocol’s governance forum. The plaintiffs argue that the blocked ETH should be treated as North Korean property, based on widely shared on-chain attributions linking the Kelp DAO attacker to the Lazarus group, and that it should be used to satisfy decades-old court rulings. Aave’s submission rejects the premise based on fundamental principles of property law: a thief does not acquire ownership of what he steals. In a footnote that has already drawn industry attention, Aave lawyers accuse Gerstein Harrow of misrepresenting the case law, calling the firm’s claim that «DAOs like the Arbitrum DAO were considered general partnerships» a «simply false» claim. Neither Samuels v. Lido DAO nor Sarcuni v. bZx DAO — the two cases cited by plaintiffs — held any DAO to be a partnership.
«These funds belong to the affected users from whom they were stolen, period.» — Stani Kulechov, founder of Aave Labs.
The Trap Inside the Bailout: How Lockdown Created Jurisdiction
When the bridge-uk Kelp DAO was mined on April 18, the attacker emptied around $293 million in rsETH. Aave alone suffered between $124 million and $230 million in losses from positions using unhedged rsETH as collateral. On April 20–21, the Arbitrum Security Council — a small group of multisig signatories with emergency powers — stepped in to block the 30,766 ETH that reached the layer-2 network. This blockade was the instrument that prevented further dispersal. It was also when the assets became accessible to US courts. Security Council intervention created a static, identifiable wallet on a known network with a known governance structure. Gerstein Harrow’s restraining order could only be issued because Arbitrum DAO — through the emergency action — converted the funds from stolen goods in transit into a held position. The same mechanism that DeFi uses to protect victims of exploits gives external lenders the procedural basis to claim the same funds. This is the precedent the industry should follow. If the court rules that the restraining order is valid, every freeze by a Security Council henceforth becomes a clear target for any creditor with a U.S. judgment related to those funds — not just plaintiffs in terrorism cases, but also tax authorities, bankruptcy trustees and claims associated with sanctioned entities. Future bailouts will have to make a new choice: freeze and thus create jurisdiction, or let the funds disperse and lose them. The DeFi United Coalition — Aave, Kelp DAO, LayerZero, Certora, with pledges from Consensys (30,000 ETH), Mantle (30,000 ETH), and Kulechov himself (5,000 ETH) — has raised over $311 million in pledged capital to compensate rsETH holders. Arbitrum’s 30,766 ETH was the single largest contribution. An Arbitrum Snapshot poll opened on April 30 showed 99% support for releasing the funds, with a May 7 deadline. The court order practically suspended this term.
What the court will decide — and what every DAO is now after
Three open questions count in the next 30 days.
1. Can a DAO be notified? The document filed by Aave raises procedural issues related to whether Arbitrum DAO qualifies as a legal entity liable to be notified as a third party garnishee. If Judge Garnett decides that it cannot be served in the manner attempted, the restraining order fails on procedural grounds before reaching the property dispute. If it decides it can, every DAO with US jurisdictional ties becomes a potential serviceable defendant.
2. Does the property argument stand? The plaintiffs’ theory calls for the court to treat the ETH that temporarily passed through an attacker’s wallet as North Korean property. The Aave paper argues that this overturns the standard rule that title does not transfer by theft. If the court accepts the plaintiffs’ theory, on-chain attribution becomes a sufficient basis to turn any funds recovered from an attack into forfeitable government assets.
3. Will the bond be enforced? The $300 million bond claim is the pressure point. If Judge Garnett requires the plaintiffs to deposit that amount as a condition of maintaining the freeze, the practical case ends — Gerstein Harrow’s clients are seeking $877 million in unpaid damages, not liquid capital. A significant collateral demand would force a settlement or withdrawal.
Attorney Gabriel Shapiro, reviewing the file on X, summarized the procedural situation: «Arbitrum DAO is not allowed to do anything with KelpDAO’s funds for now, pending a forfeiture hearing.» On-chain analyst ZachXBT called the plaintiffs’ approach «predatory.»
A hearing date has not yet been set. Gerstein Harrow has not yet filed a public response.