[Constitutional] AIP: Amended Release of Frozen ETH Pursuant to Court Order
Status: Amended following passed Temp Check
Authors: Aave Labs, KelpDAO, LayerZero, EtherFi, Compound
Date: 5/11/26
Summary
This amended Constitutional AIP updates the execution path for the previously posted proposal to release the frozen ETH secured by the Arbitrum Security Council in connection with the rsETH incident. Since then, a Court order was issued authorizing the transfer of the frozen ETH to a wallet controlled by Aave LLC and for Aave LLC to hold this frozen ETH while the court continues to deliberate.
This amendment preserves the intent approved in the Temp Check to transfer the frozen ETH, but it updates the recipient and custody mechanics so that the onchain execution complies with the recent Court order.
If this Constitutional AIP passes, the payload will transfer 30,765.667501709008927568 ETH from 0x0000000000000000000000000000000000000DA0 to the Aave LLC-controlled receiving address listed below.
Aave LLC receiving address:
0x3b87db6ded35eBD28EcbF8014fb325eef23f6C07
Court order: https://storage.courtlistener.com/recap/gov.uscourts.nysd.653423/gov.uscourts.nysd.653423.52.0.pdf
Background
On April 21, 2026, the Arbitrum Security Council executed an emergency action to immobilize ETH connected to the rsETH incident. The ETH was moved to 0x0000000000000000000000000000000000000DA0 pending a subsequent governance action.
Then, on April 25, 2026, Aave Labs and others posted an AIP to approve the release of the 30,765.667501709008927568 ETH that the Arbitrum Security Council froze following the April 18 incident. That AIP proposed to release the recovered ETH into an ongoing, coordinated recovery effort with the goal of restoring the economic backing of rsETH. This original proposal completed the Temp Check process with overwhelming approval and strong delegate support.
The standard Arbitrum governance process uses Snapshot for Temp Checks and Tally for onchain execution, with Constitutional proposals targeting Arbitrum Core. Arbitrum’s governance documentation also distinguishes between Constitutional and Non-Constitutional AIPs, and states that Constitutional proposals are submitted through Arbitrum Core on Tally.
After the Temp Check, plaintiffs holding judgments against North Korea served a restraining notice on Arbitrum DAO seeking to restrain the ETH immobilized as part of the recovery effort. Aave LLC filed an emergency motion to vacate the notice, and the Court held a hearing on May 6.
Following additional submissions from the parties, the Court accepted Aave LLC’s proposed path. The Court entered an order authorizing an onchain Arbitrum DAO vote to transfer the immobilized ETH to Aave LLC, with the restraining order following the ETH and attaching to Aave LLC upon transfer.
This amended AIP updates the court order’s execution path accordingly.
Motivation
The goal of the original proposal remains unchanged. The frozen ETH is part of the broader recovery effort following the rsETH incident, and Arbitrum Governance has already signaled support for releasing the ETH rather than leaving it immobilized indefinitely.
However, on the evening (New York time) of Friday, May 1, 2026, a law firm representing plaintiff-judgment creditors in a case called Kim v. Democratic People’s Republic of Korea, 25-MC-527 (S.D.N.Y.) served a restraining notice on “Arbitrum DAO” that threatened significant delay. Aave Labs acted as promptly as possible. On Monday May 4, 2026, Aave LLC, a US entity of Aave Labs, filed an emergency motion to vacate the restraining order. That motion was heard in oral arguments on May 6, 2026, and the substantive issues remain under consideration by the court. (We are grateful to the judge for her rapid response and thoughtful, ongoing consideration.)
On Friday, May 8, 2026, after an exchange of letters from the plaintiffs and Aave LLC, the court issued an order that the Restraining Notice issued to “Arbitrum DAO” is modified, so as to allow an on-chain vote to transfer the immobilized assets to a digital assets wallet controlled by Aave LLC. The judge specifically ordered that such a transfer process “will not be deemed to be a violation of the Restraining Notice,” and that “[a]ny party initiating that on-chain transaction, voting with regard to that on-chain transaction, or participating in the on-chain transfer of assets to Aave LLC shall not be in violation of the Restraining Notice.”
In other words, tokenholders are free to vote or otherwise participate in this process, without fear of violating the restraining notice. (Not legal advice; you are, of course, encouraged to consult your own attorney.)
The court reserved decision on all other matters in connection with the Restraining Notice and the Immobilized Assets, meaning that the central question on the merits – whether and when the funds will be released for use in the recovery effort – remains to be decided by the court.
After that transfer, and per the court’s order, Aave LLC will abide by the terms of the Restraining Notice as if the Restraining Notice had been issued to Aave LLC, until and unless the Restraining Notice is vacated or further modified by the Court, is withdrawn or modified by Plaintiffs, or expires by operation of law. In other words, Aave LLC will not sell, assign, transfer, or interfere with these funds, until the court allows such actions.
We view this order as very helpful for the Arbitrum community. It allows the ETH to be transferred to Aave LLC, so that assuming the court agrees with Aave LLC’s position that the funds may be used in the recovery efforts, that process will be logistically easier. Aave is grateful to the Arbitrum community for being a “Good Samaritan,” and we are eager to ease any further administration burdens on the Arbitrum community.
Amendment to the Prior Proposal
This AIP amends the prior proposal titled:
[Constitutional] AIP: Approve Release of Frozen ETH
We note that the court’s order forces a modification in the onchain AIP from the snapshot version. The original proposal was that the recipient address would be a 3-of-4 Gnosis Safe with signers from Aave, KelpDAO, EtherFi, and Certora. However, for administrative and legal convenience, and to be consistent with the court’s order, the onchain vote will be that the recipient address will be to a wallet controlled by Aave LLC.
Aave will continue to coordinate with the relevant parties, and the goal remains the same. The ETH is intended to be applied in a neutral and non-discriminatory manner toward restoring rsETH’s backing within the Kelp protocol. Every unit of ETH returned to the recovery effort narrows the backing shortfall and moves rsETH closer to full collateralization.
Accordingly, the amendment is limited to the recipient and custody mechanics.The original proposal requested release of the frozen ETH into the coordinated rsETH recovery effort. This amended proposal requests transfer of the frozen ETH to Aave LLC pursuant to the court order.
After the transfer, and per the court’s order, Aave LLC will abide by the terms of the restraining notice as if the restraining notice had been issued to Aave LLC, until and unless the restraining notice is vacated or further modified by the Court, is withdrawn or modified by Plaintiffs, or expires by operation of law. In other words, Aave LLC will not sell, assign, transfer, or interfere with these funds, until the court allows such actions.
Specification
This Constitutional AIP authorizes the transfer of 30,765.667501709008927568 ETH from:
0x0000000000000000000000000000000000000DA0
to the following Aave LLC-controlled receiving address:
0x3b87db6ded35eBD28EcbF8014fb325eef23f6C07
The transfer is made pursuant to the Court order dated May 8, 2026, which authorizes an onchain Arbitrum DAO vote to move the immobilized ETH to Aave LLC and provides that the restraining order will follow the ETH and attach to Aave LLC upon transfer.
Aave LLC will comply with the restraining order while the Court continues to consider the matter.
This AIP does not authorize Aave LLC to distribute, transfer, pledge, encumber, stake, lend, swap, bridge, rehypothecate, or otherwise use the ETH unless permitted by the Court or applicable legal process.
This AIP does not request any new treasury allocation from Arbitrum DAO.
Implementation
If this AIP passes, the payload will execute a transfer of 30,765.667501709008927568 ETH from 0x0000000000000000000000000000000000000DA0 to 0x3b87db6ded35eBD28EcbF8014fb325eef23f6C07.
The proposal will be submitted as a Constitutional AIP through Arbitrum Core. Arbitrum’s proposal submission guide states that Constitutional proposals target Arbitrum Core, while Non-Constitutional proposals target Arbitrum Treasury.
Payload Summary
Target source address:
0x0000000000000000000000000000000000000DA0
Recipient:
0x3b87db6ded35eBD28EcbF8014fb325eef23f6C07
Amount:
30,765.667501709008927568 ETH
Action:
Transfer ETH to Aave LLC-controlled receiving address pursuant to Court order.
Additional actions:
None.
Treasury spend:
None.
Legal Posture
The restraining notice previously served on Arbitrum DAO sought to restrain the ETH immobilized as part of the rsETH recovery effort. The Court has now entered an order authorizing an onchain Arbitrum DAO vote to transfer the ETH to Aave LLC, with the restraining order following the ETH and attaching to Aave LLC upon transfer.
Aave LLC will comply with the restraining order while the Court continues to consider the matter.
This means the onchain vote is not asking delegates to disregard the restraining order. It is asking delegates to approve the transfer path authorized by the Court.
The Court order is attached here: https://storage.courtlistener.com/recap/gov.uscourts.nysd.653423/gov.uscourts.nysd.653423.52.0.pdf
Recovery Context
In parallel, the broader rsETH incident recovery plan continues.
On May 6, the identified thief positions on Aave V3 were liquidated. The retrieved rsETH collateral was transferred to the Recovery Guardian as specified in the preceding AIP approved by Aave DAO governance. Other users, including Umbrella stakers, were not impacted by this liquidation process.
The next phase of the plan focuses on restoring rsETH backing and returning affected markets to normal operation. On Arbitrum, the liquidated rsETH will be burned. Kelp will retire the corresponding LayerZero packet on Ethereum so that it cannot mint new rsETH on the receiving side. Together, those steps are intended to neutralize the inflated rsETH supply created by the exploit.
On Ethereum, the seized rsETH will be sent to the bridge lockbox. That ETH, together with committed ETH from the broader DeFi United coalition, is expected to restore the backing of the rsETH lockbox contract. Once the lockbox is backed, the bridge can resume normal operation.
Separately, replacement funds are expected to be borrowed as a contingency to reduce the timing impact on affected Aave users while the immobilized ETH remains subject to the Court process.
This section is provided for recovery context only. The onchain action authorized by this AIP is limited to the transfer of the frozen ETH to Aave LLC pursuant to the Court order.
Overall Cost
No new treasury allocation is requested.
This proposal concerns ETH already immobilized on Arbitrum One in connection with the rsETH incident. The direct budgetary cost to Arbitrum DAO is expected to be zero outside of normal governance execution overhead.
Risks and Considerations
This amendment is submitted to address the main risk of legal execution risk by aligning the transfer with the Court’s order and by having the restraining order follow the ETH to Aave LLC upon transfer.
The proposal does not ask delegates to determine final ownership of the ETH. The Court process remains ongoing.
The proposal does not authorize immediate distribution to affected users. Aave LLC will comply with the restraining order while the Court continues to consider the matter.
The proposal does not create new Arbitrum DAO treasury exposure. It only authorizes transfer of ETH already immobilized as part of the Security Council emergency action.
The proposal changes the recipient from the originally contemplated recovery structure to Aave LLC. Because that is a material execution-path change after the Temp Check, the original coauthors have been asked to support this amendment before onchain submission.
Next Steps
First, the final payload will be prepared and submitted onchain.
Second, the Constitutional AIP will proceed to onchain vote through Arbitrum Core.
Third, if the AIP passes and execution occurs, the immobilized ETH will be transferred to the Aave LLC-controlled receiving address, with the restraining order following the ETH and attaching to Aave LLC upon transfer.
Requested Action
Arbitrum delegates are asked to vote FOR this amended Constitutional AIP.
A FOR vote approves the court-authorized transfer of 30,765.667501709008927568 ETH from 0x0000000000000000000000000000000000000DA0 to the Aave LLC-controlled receiving address listed in this proposal.
A FOR vote does not authorize distribution or use of the ETH while the restraining order remains in effect.
A FOR vote preserves the recovery objective supported by the Temp Check while updating the execution path to reflect the Court’s order.
An AGAINST vote leaves the ETH immobilized at the current address unless and until another governance or legal path is approved.