Aave LLC has filed an emergency motion in the Southern District of New York, aiming to lift a restraining notice that currently freezes roughly $71 million in recovered Ethereum tied to the April 18 Kelp DAO incident. The filing asks the court to vacate the notice, which has locked the funds since they were traced and seized after the exploit.
Why the funds were frozen
The restraining notice was issued as part of efforts to secure assets linked to the Kelp DAO breach. On April 18, an attacker drained funds from the protocol, prompting investigators to track the stolen ETH. Aave LLC, which manages the Aave protocol, later recovered the ether but now finds those same funds caught in a legal hold.
The company argues the restraining notice was mistakenly applied to assets that belong to the protocol, not to the person or entity under investigation. In its motion, Aave LLC contends the notice should be vacated so the recovered ETH can be returned to the Aave ecosystem.
What the motion seeks
The emergency motion asks the Southern District of New York to set aside the restraining notice immediately. Aave LLC claims the continued freeze is unnecessary and harms the protocol's operations. Without a vacatur, the $71 million remains inaccessible, effectively tying up capital that could be used for user redemptions or other financial activities.
Court documents don't name the party that obtained the restraining notice or the exact grounds for its issuance. The motion focuses on the procedural error: the notice targets property that Aave LLC says rightfully belongs to the protocol's users and liquidity pools, not to the alleged wrongdoer.
The larger picture
The Kelp DAO incident remains under investigation. While law enforcement managed to recover a substantial portion of the stolen ether, the legal wrangling over who can access those funds has now spilled into federal court. Aave LLC's move is a bid to speed up the return of assets that have already been located and secured.
The Southern District of New York, known for handling complex financial litigation, will decide the motion. A hearing date has not yet been scheduled. For now, the $71 million sits in limbo, and Aave LLC is pushing for a ruling that would restore control to the protocol.
