Judge Approves $71M ETH Transfer to Aave Following Lazarus Group Exploit

Severity: High (Score: 72.5)

Sources: Cryptorank, News.Bitcoin

Summary

A U.S. federal judge has authorized the transfer of approximately 30,765 ETH, valued at $71 million, to an Aave-controlled wallet, marking a significant step in the recovery from the KelpDAO exploit. The exploit, attributed to North Korea's Lazarus Group, allowed attackers to borrow nearly $230 million in ETH using unbacked rsETH collateral. The Arbitrum Security Council had frozen the ETH immediately after the exploit to protect the funds. Legal challenges arose when a lawyer representing families with terrorism judgments against North Korea sought to block the transfer, claiming the funds were subject to seizure. Judge Garnett's ruling on May 9, 2026, resolved these legal complications, allowing the recovery process to proceed. Aave has already liquidated hacker-linked positions and is working to restore the collateral ratios for rsETH. The recovery plan aims to back the rsETH bridge and stabilize the DeFi ecosystem. Key Points: • A U.S. judge approved the transfer of $71 million in ETH to Aave for recovery efforts. • The exploit involved North Korea's Lazarus Group using unbacked rsETH to borrow $230 million. • Aave has liquidated hacker-linked positions and is moving to restore collateral ratios.

Key Entities

• Lazarus Group (apt_group)
• Aave (platform)
• Aave V3 (platform)
• LayerZero (platform)
• KelpDAO (company)
• Arbitrum (company)
• Ethereum (company)
• North Korea (country)
• bitcoin.com (domain)