Decentralized lending protocol Aave has initiated a binding Arbitrum DAO “Constitutional” governance vote to transfer about 30,765 ETH (roughly $71 million) sitting frozen on Arbitrum into a wallet controlled by Aave LLC, following a U.S. court order tied to a high‑profile exploit and competing legal claims from terrorism judgment creditors. The ETH represents funds recovered from last month’s Kelp DAO–related exploit that Arbitrum’s Security Council previously immobilized, and any movement of the assets must now comply with a restraining notice obtained by U.S. creditors holding approximately $877 million in unpaid terrorism judgments against North Korea. The court order, issued by Judge Margaret Garnett in Manhattan, expressly authorizes Arbitrum’s on‑chain governance process to decide whether to transfer the immobilized ETH from an Arbitrum Security Council-controlled address to an Aave LLC-controlled address, but stipulates that the funds remain under strict legal restrictions and cannot be freely used, moved, or deployed by Aave without further court permission. The Arbitrum DAO is implementing this via a Constitutional Arbitrum Improvement Proposal (AIP), its highest tier of binding governance action, with on‑chain voting by ARB token holders scheduled to begin on May 15. The legal and governance dispute centers on who ultimately owns the recovered ETH. Blockchain analytics firms and forensic researchers have widely attributed the original exploit to North Korea’s Lazarus Group, but that attribution has not been formally accepted as a legal finding in the ongoing court case or in Arbitrum’s governance process. Lawyers for the terrorism judgment creditors argue that, if courts eventually deem the funds enforceable against North Korea, the ETH could help satisfy long‑standing terrorism awards; Aave counters that the ether belongs to users harmed in the exploit, not to the hackers who only briefly controlled it, framing the matter as a conflict between compensation for DeFi victims and recovery for terrorism victims. In parallel, some of the same creditor groups have sued privacy protocol Railgun DAO over alleged North Korea‑linked flows, underscoring how U.S. sanctions and terrorism enforcement are increasingly intersecting with DeFi governance and asset recovery onchain. "entities":["Aave","Aave LLC","Aave protocol","Arbitrum","Arbitrum DAO","Arbitrum Security Council","ARB (Arbitrum) token","Kelp DAO","Ethereum (ETH)","North Korea","Lazarus Group","Judge Margaret Garnett","United States terrorism judgment creditors","Railgun DAO"]}'}}

AI-generated background, compiled from web sources — not editorial content.

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