A Manhattan judge has modified a restraining notice that froze $71 million in Ether belonging to the Arbitrum DAO, clearing the way for the funds to be moved to the lending protocol Aave. The frozen assets are tied to a hack linked to North Korea, and the court order preserves the legal claim of terrorism victims on the money.
The court order and its conditions
The modification came from a judge in the Southern District of New York, who adjusted an earlier freeze that had locked the Ether in place. Under the new terms, Arbitrum DAO can transfer the funds to Aave, a decentralized finance platform that lets users lend and borrow crypto. The DAO’s legal team had argued that leaving the assets idle was inefficient and that moving them to Aave would generate yield while the court case plays out.
The judge agreed but attached a key condition: terrorism victims who have a claim on the funds retain their legal rights. That means if the courts eventually rule the stolen Ether belongs to the victims, the money will still be reachable even after it’s moved to Aave. The order effectively balances the DAO’s desire to manage its treasury against the victims’ potential ownership.
The link to North Korea and frozen funds
The $71 million is part of a larger pool of stolen crypto traced back to a North Korean hacking group. Investigators have identified the funds as proceeds from cyberattacks that targeted cryptocurrency exchanges and bridges. The U.S. government has repeatedly warned about North Korea’s use of digital assets to evade sanctions and fund its weapons programs.
Earlier this year, a court froze the Ether after the terrorism victims filed a lawsuit seeking to recover damages. The victims argue the stolen funds should be returned to them, not kept by the DAO. Arbitrum DAO, which controls the community treasury, has maintained that it obtained the assets in good faith and should be allowed to manage them normally.
What happens next
The transfer to Aave is expected to take place in the coming days. Once deposited, the Ether will earn interest, though it’s not clear how that yield will be handled if the victims win their case. The court has not set a trial date, but the modified restraining notice gives both sides room to keep negotiating.
For now, the DAO can put its frozen assets to work, but the terrorism victims’ claim remains a live issue — one that could eventually determine who gets the money.
