A New York judge has postponed Aave's motion to unlock $71 million in ether that was frozen after the Kelp DAO hack, ordering both sides to submit more details before a ruling can be made. The delay pushes back what was expected to be a quick resolution for funds caught up in the aftermath of the exploit.
The frozen funds and the hack
The $71 million in ETH was frozen by Aave's governance following the Kelp DAO attack, a security breach that siphoned off assets from the decentralized finance protocol. Aave, a lending and borrowing platform, moved to lock the funds as a protective measure, but the move also trapped legitimate funds tied to the hack's fallout.
Kelp DAO, a liquid staking platform, suffered the exploit earlier this year, leading to a chain of frozen assets across multiple DeFi protocols. The frozen ETH in question belongs to an address linked to the attack, but the exact ownership and legal claims remain contested.
Why the judge wants more
The judge declined to immediately rule on Aave's motion, citing a need for clearer information from all parties involved. The court wants a fuller picture of who the funds belong to, whether any innocent parties are affected, and how the freeze interacts with broader crypto asset tracing efforts.
Aave's legal team argued that unlocking the ETH would allow the protocol to repay users and restore normal operations. But without a complete record of the hack's financial chain, the judge said she couldn't sign off just yet.
What's at stake for Aave
For Aave, the frozen funds represent a significant chunk of value tied up in legal limbo. The protocol's ability to quickly resolve such situations affects user trust and its reputation for handling security incidents. A longer delay could also complicate Aave's internal treasury management and its relationships with other DeFi platforms that rely on the frozen assets.
The case is being watched closely by the DeFi industry, where frozen funds after hacks often lead to protracted legal battles. Unlike centralized exchanges, DeFi protocols have limited tools to reverse transactions or compel return of assets without court orders.
Next steps in court
The judge has set a deadline for both Aave and any opposing parties to submit additional documentation. No new hearing date has been scheduled yet. Until the court gets the requested details, the $71 million in ETH remains locked — and the hack's financial scars stay open.
