The Arbitrum DAO has voted to release the frozen 30,765.6 ETH (about $70 million) to the DeFi United initiative that formed to mitigate the impact of the $292 million exploit on Kelp DAO last month.
According to Arbitrum DAO's voting snapshot, 182.2 million votes supported the release of the tokens, accounting for 90.96% of all voting power. Around 9% of the voters abstained on the matter. With the approval, Arbitrum is set to become the largest donor to DeFi United.
This stems from the April 18 attack on LayerZero-powered Kelp DAO. The attacker, suspected to be North Korea's Lazarus Group, exploited a single-verifier configuration of an Omnichain Fungible Token (OFT) bridge to drain 116,500 rsETH from Kelp DAO.
On April 20, the Arbitrum Security Council froze the ETH that the Kelp DAO attacker had moved to an Arbitrum One address. Those funds were subsequently moved to an address controlled by the protocol.
Meanwhile, the attacker moved a significant portion of the stolen rsETH to Aave as collateral for WETH, creating about $190 million in bad debt for the protocol.
This prompted the establishment of DeFi United to coordinate restitution efforts. Some of the contributions were 30,000 ETH from Consensys and Joseph Lubin, Mantle's 30,000 ETH loan, and LayerZero's 5,000 ETH.
Legal limbo
However, the 30,766 ETH transfer would likely be blocked due to a court order restricting Arbitrum DAO from moving the recovered funds. The May 1 order was filed by multiple plaintiffs from separate years-old terrorism judgments against North Korea that seek to claim the frozen ETH as restitution.
"Arbitrum DAO is not allowed to do anything with the KelpDAO funds for now, until a divestiture hearing," crypto attorney Gabriel Shapiro previously commented on X regarding the court order.
In response to the order, Aave LLC filed an emergency motion in federal court to challenge the ruling, arguing that it was based on unproven speculation that the Kelp DAO exploit was carried out by Lazarus. It further added that even if this were the case, temporary possession of stolen assets does not equate to ownership.
The Block has reached out to Aave for further information on the legal situation.