Aave and other stakeholders affected by last month’s Kelp DAO attack initiated a binding governance vote through Arbitrum to transfer $71 million worth of disputed ether (ETH) to an address controlled by Aave. This new voting step aims to make a formal decision on moving assets using the protocol’s on-chain governance mechanism.
Critical Arbitrum vote and court decision
This process, called the Constitutional Arbitrum Improvement Proposal, stands out as a formal management tool that enables important decisions to be made within the Arbitrum community. The amended version of this proposal is based on a recent court decision by Judge Margaret Garnett. The court order in question allows the Arbitrum DAO to hold an on-chain vote to transfer the disputed ether from the existing frozen account to a wallet controlled by Aave. However, the transfer of assets will take into account claims from terrorism compensation cases allegedly linked to North Korea.
If the vote is accepted, the 30,765 ETH frozen by the Arbitrum Security Council will be moved to the address controlled by Aave, as required by the court order. However, these assets cannot be used or transferred freely unless the court decision allows it. This means Aave will not have free disposal of funds and strict legal restrictions on transfer will continue.
North Korea-related allegations and legal wrangling
The legal fight over frozen assets moved to a different dimension after blockchain analysis companies showed the North Korea-linked Lazarus Group responsible for the incident. However, this reference has not yet been officially proven or legally recognized within the Arbitrum’s management process or in the ongoing court cases. That is, such assessments are still based only on reports from external analysis and criminal investigation companies.
Although technical research suggests that the attack has ties to North Korea, this claim is not yet a legally accepted finding.
Still, lawyers representing families seeking enforcement authority over nearly $877 million in unpaid U.S. terrorism damages argue that if those assets are legally determined to belong to North Korea, the funds could be used to fund court settlements. This claim creates a scenario that makes as much sense as the users who were harmed by the attack.
Conflict between DeFi users and creditors
On the Aave side, ETH belongs to the users damaged by the attack; It is stated that the fact that the attackers temporarily gained control does not change the ownership of the funds. Thus, the process evolved into a complex discussion about how to share the obtained funds between decentralized finance users and creditors seeking terrorism compensation.
Aave is known for its lending applications in the decentralized finance sector and has a large user base. This legal dispute that emerged after the Kelp DAO attack may lead to exemplary results both in terms of asset management in the sector and international law.
