Judge Clears Arbitrum DAO to Vote on $71M ETH Transfer

A federal judge on May 8 permitted Arbitrum DAO to hold an on-chain binding vote on whether to transfer 30,765 ETH, roughly $71 million, from its frozen treasury to Aave LLC to support recovery efforts for the rsETH exploit.

Judge Margaret Garnett of the U.S. District Court for the Southern District of New York modified a restraining notice that had prevented use of the funds. The order does not lift the freeze. It allows token holders to vote on a proposal to move the assets to Aave LLC, the legal entity behind the Aave protocol. The binding governance vote is scheduled for May 15.

The funds were frozen after an April 18 exploit linked by law enforcement and analysts to North Korea’s Lazarus Group drained assets tied to the rsETH token. On May 1, the law firm Gerstein ROLP filed a restraining notice concerning the 30,765 ETH and related the notice to creditor claims totaling $877 million. With the assets frozen, Aave LLC could not deploy them as part of its planned remedy for users affected by the exploit.

Aave LLC asked the court for emergency relief so on-chain governance could proceed. The May 8 order narrowly permits the DAO vote while leaving the restraining notice and creditor claims in place. If DAO voters approve the transfer, Aave would receive the ETH to use in its rsETH recovery plan, but any actual movement of funds would remain subject to further court oversight and potential legal challenges from creditors or other parties.

Separately, Mantle DAO approved a 30,000 ETH loan to Aave on May 12 with unanimous support from its voters. That loan is secured by Aave’s revenue streams and token holdings. If the Arbitrum vote passes and courts allow transfers, Aave could have access to more than 60,000 ETH to deploy toward compensating rsETH exploit victims.

The court order affects the DAO’s ability to conduct governance voting but does not resolve the underlying legal claims. The restraining notice continues to apply for purposes beyond the authorized vote. The next steps depend on the May 15 vote result, any immediate legal responses, and subsequent judicial rulings.