In a 30-page response filed Tuesday, attorneys for victims of three North Korea terrorism cases reframed the April 18 Aave hack as fraud rather than theft — a distinction that could give the attackers legal title to the borrowed crypto.
The filing challenges a New York restraining notice that froze ETH on Arbitrum after the rsETH exploit, with Aave arguing the funds belong to users, not North Korea judgment creditors
Aave filed an emergency motion in a New York court to overturn a restraining notice which is blocking the transfer of 30,766 ETH intended to compensate victims of the Kelp DAO hack.
Aave has become so crucial to defi that it is now viewed as too important to fail, according to a Messari research analyst.
Aave's recovery shows demand returning, but reliance on coordinated support signals rising risk.
Aave entered April 2026 as DeFi's largest lending protocol. By mid-month, it was managing the fallout from one of the most damaging exploits in its history — and the on-chain data is now revealing just how deeply the event disrupted the protocol's core activity.
Aave's recovery plan converts ETH into rsETH, restoring collateral and resuming secure bridge operations.
Recovered tokens will be sent to a DeFi United multisig wallet, redeemed for ETH, and used to cover the shortfall across affected markets.
DeFi United, a coalition of multiple blockchain projects and crypto ecosystem individuals, has laid out a detailed plan to restore the backing of rsETH after this month's Kelp DAO hack sent shockwaves through lending markets.
Aave founder Stani Kulechov published a technical implementation plan on Tuesday to restore rsETH backing across affected protocols, with execution sequences set to begin within days. Key Takeaways: The recovery runs two parallel tracks, i.e., restoring rsETH's nominal 1.07 ETH backing ratio through tranched ETH deposits, and clearing eight Aave positions.
The response to the DeFi recovery fund has quickly extended beyond Aave, and in some cases began with direct outreach.
AAVE successfully defends the demand zone between $90 and $95, halting bearish pressure following a recent massive sell-off in the DeFi market. The strategic expansion to the Solana network via Sunrise seeks to diversify liquidity and attract a broader, more active user base.