North Korea Terror Attack Verdict Holder Escalates Dispute for Control of $71 million in Aave Frozen Assets: Cites Anti-Terrorism Insurance Law

The legal battle between the holder of a North Korea terror judgment and Aave over the frozen assets worth $71 million has entered its third round. CoinDesk reported on May 6 that the plaintiffs’ lawyers have filed new court documents, changing their argument to claim the ETH was obtained through “fraud” rather than “theft,” thereby bypassing Aave’s “the thief does not own the stolen goods” defense. Aave’s motion to lift the May 1 freezing order is being heard today (May 6) in Manhattan federal court.

The plaintiffs’ new strategy: invoke TRIA to classify ETH as North Korean state assets

In the latest filing, the plaintiffs’ legal team (Gerstein Harrow LLP representing family members of North Korea terror attack victims, including Han Kim, etc.) has shifted its legal arguments. Instead of only arguing for “rights to stolen property,” it cites the U.S. Terrorism Risk Insurance Act (TRIA):

Claim that the April 18 hack of the Kelp DAO cross-chain bridge was fundamentally “fraud,” not “theft”

If characterized as fraud, the ETH obtained by the hackers can be viewed as “North Korean state assets” under a “specific legal framework”

Under TRIA, North Korean state assets can be executed by the victims’ families to satisfy the 2015 judgment

This litigation strategy sidesteps Aave’s core defense—“stolen property from the start does not belong to the thief and should be restored to the victim user”—shifting the focus from “who the ETH belongs to” to “whether, under anti-terror legal frameworks, it can be prioritized for attachment.”

Challenging Aave’s legal standing: counterattack using Aave’s own terms

Another key argument from the plaintiffs is highly ironic: the plaintiffs cite Aave’s own service terms—Aave’s documents explicitly state that “Aave does not control user assets”—to argue that Aave lacks standing to speak on users’ behalf in the lawsuit and therefore has no legal standing to challenge the freezing order.

This argument creates a dilemma for the legal positioning of DeFi protocols:

If Aave claims it has standing, it effectively acknowledges that the protocol substantially controls users’ assets, contradicting its own “DeFi is non-custodial” positioning

If Aave lacks standing, users’ interests are effectively unrepresented in court, leaving DeFi users with little protection under the traditional judicial system

This is not a technical issue, but a fundamental legal challenge DeFi faces in 2026—when lawsuits enter traditional courts, who can represent a “collective of protocol users”? There is no precedent, and the outcome of this case could become a key precedent in DeFi governance history.

Aave’s response: DeFi United raised $328 million, 4x the disputed amount

Facing a legal offensive from North Korea terror victims, Aave-led DeFi United recovery alliance (including Lido, Mantle, EtherFi, etc.) has continued to ramp up funding. As of early Tuesday this week, the alliance has raised $328 million—more than 4 times the $71 million in dispute.

What this funding means: even if the court ultimately rules that the $71 million belongs to the families of North Korea terror victims, Aave and DeFi United can still mobilize the remaining funds and compensate affected Aave users from another funding pool. In abmedia’s May 5 report on Aave’s emergency motion arguing the defense that “the thief does not own stolen goods,” this case is the direct follow-up—“even if the court sides with the North Korean family, users can still receive compensation.”

Key points to watch for the DeFi industry and the next steps in this case: after today’s hearing, the court’s ruling—whether it adopts the TRIA framework, whether it finds that Aave has standing, and whether any DAO governance intervention to freeze funds is treated as “centralized action.” Each of the three answers will establish precedents across “DeFi legal status,” “DAO governance risk,” and “cross-border hacker asset recovery mechanisms.”

This article about the holder of the North Korea terror judgment escalating the $71 million Aave frozen-assets dispute—citing anti-terror insurance law—first appeared on Chain News ABMedia.