Judge Clears Aave to Transfer $71M ETH Tied to North Korea Hack as Legal Battle Continues

A federal judge has authorized the movement of approximately $71 million in frozen Ethereum linked to a North Korea hack, clearing the path for the assets to shift from Arbitrum to Aave while preserving the legal freeze that accompanies them. Judge Margaret Garnett's ruling represents a significant procedural development in ongoing litigation, as the court determined that the frozen exploit funds can move between protocols without dissolving the legal constraints attached to them.

The frozen ETH has been locked on Arbitrum pending legal proceedings connected to the hack. The court's decision allows the assets to migrate to Aave, but critically, the legal encumbrances transfer with the funds—meaning the assets remain subject to ongoing claims regardless of where they move on-chain. Terrorism plaintiffs continue to pursue their case, and the ruling establishes that the legal freeze follows the assets across DeFi infrastructure.

The case highlights the growing intersection between blockchain asset mobility and traditional legal mechanisms. By allowing the funds to move while maintaining the freeze, the court has signaled that decentralized finance protocols are not beyond the reach of judicial oversight—particularly when assets are alleged to have ties to sanctioned actors or illicit activity. For Aave, Arbitrum, and the broader DeFi ecosystem, the decision illustrates how U.S. courts are increasingly willing to engage with the technical realities of cross-protocol asset movement while preserving legal claims on disputed holdings.