A Manhattan judge approves the transfer of $71 million worth of ETH on Arbitrum to Aave, while preserving claims by alleged North Korean terror attack creditors

On May 9, a New York Manhattan federal judge Margaret Garnett ruled to allow the Arbitrum DAO to freeze $71 million (30,765 ETH) and transfer the assets to a wallet controlled by Aave, continuing to push forward the recovery plan; in the same ruling, she also preserved the legal claims of holders of a North Korea terror attack judgment. CoinDesk reports: the judge modified the earlier seizure order, enabling Arbitrum governance to move that amount of ETH via on-chain voting, and protecting voting participants from joint liability under the seizure order. The first-stage temperature check vote on Friday passed with over 90% support; the final transfer still requires another binding on-chain vote.

Ruling details: preserve the parties’ legal standing, and release procedures for transferring funds

Garnett’s ruling specifics:

Modify the prior seizure order, allowing ETH to be moved from Arbitrum to an Aave-controlled wallet

Preserve the legal claims of holders of the North Korea terror attack judgment and not withdraw their request for the asset

Protect Arbitrum governance voting participants from joint liability under the seizure order

Did not issue a final merits ruling on whether the ETH is “North Korean state property”

The design of this ruling is巧妙—releasing funds so Aave can execute the user compensation plan, while keeping alive the possibility that the terror-attack creditors’ claims may be pursued in the future. The judge maintained balance between both sides on fund recovery and compensation rights, without favoring either.

Background: Gerstein’s legal team argues the ETH is North Korean state property

The legal standoff in this case:

Plaintiffs: the North Korea terror attack victims’ family members represented by attorney Charles Gerstein, collectively holding terror-attack judgments against North Korea totaling about $877 million

Plaintiffs’ argument: the April 18 Kelp DAO hacking incident was widely attributed to the North Korea Lazarus Group; the hacked ETH is North Korean state property and can be preferentially seized by holders of the terror-attack judgments

Aave’s position: earlier this week, it moved to revoke the seizure order, arguing the assets belong to innocent users, not North Korean property; delaying would cause “domino liquidations” and broad instability across DeFi

This ruling effectively temporarily sides with Aave—allowing the funds transfer to avoid liquidation risk, but not ending the plaintiffs’ legal claims. The plaintiffs can still seek recovery in subsequent litigation.

Next steps: binding on-chain voting, then user compensation

Arbitrum governance process follow-ups:

Completed: May 9 (Hong Kong time afternoon) first-stage temperature check, with over 90% support for releasing 30,765 ETH

To be done: second-stage binding on-chain vote, to decide whether the transfer will actually take place

After that: Aave executes the user compensation plan and replenishes Aave users innocently affected in the April 18 hacking incident

The background of this case, and abmedia’s previous reporting, have been continuous: on 5/1, the Arbitrum DAO vote released 30,766 ETH to DeFi United Kelp for rescue; on 5/6, holders of the North Korea terror attack judgment escalated their fight over $71 million. This judge’s ruling is the latest step in that battle. Specific events to watch next include the timeline for the second-stage on-chain vote, the progress of Aave user compensation execution, and further legal actions by the terror-attack judgment holders after Aave completes the transfer.

This article, “Manhattan judge approves Arbitrum’s $71 million ETH transfer to Aave, preserving claims by North Korea terror attack creditors,” first appeared on 鏈新聞 ABMedia.