{"id":96857,"date":"2026-05-06T13:43:23","date_gmt":"2026-05-06T10:43:23","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=96857"},"modified":"2026-05-06T13:45:20","modified_gmt":"2026-05-06T10:45:20","slug":"lawyers-reclassify-north-korean-hack-of-kelp-as-credit-fraud","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/lawyers-reclassify-north-korean-hack-of-kelp-as-credit-fraud\/","title":{"rendered":"Lawyers Reclassify North Korean Hack of Kelp as Credit Fraud"},"content":{"rendered":"

Lawyers representing victims of North Korea have altered their legal strategy in the dispute over 30,766 ETH, which the Arbitrum team froze<\/a> following the Kelp hack<\/a>.\u00a0<\/p>\n

The attorneys argue for a reclassification of the incident: in their view, the attacker did not merely steal assets but borrowed ETH on Aave against unsecured rsETH and failed to return it.<\/p>\n

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“In reality, North Korea borrowed assets from Aave users and did not return them. When Aave attempted to liquidate the collateral, it found it was worthless,” the new document states.<\/em><\/p>\n<\/blockquote>\n

The plaintiffs cited a provision of American law: even fraudulently obtained property temporarily becomes the legal possession of the fraudster until contested. An additional basis was the Terrorism Risk Insurance Act, passed after September 11, which allows victims of terrorism to recover funds from the assets of state sponsors.<\/p>\n

If the funds stolen during the Kelp attack belonged to North Korea even temporarily, they could be seized as part of enforcing court rulings in terrorism cases, the lawyers believe.\u00a0<\/p>\n

Arguments Against Aave<\/h2>\n

In early May, a New York court prohibited<\/a> Arbitrum from unfreezing the stolen ETH. The DAO<\/a> of the L2 network planned<\/a> to transfer them to the DeFi United<\/a> fund, created to restore the ecosystem.\u00a0<\/p>\n

A few days later, the Aave team filed<\/a> an emergency motion demanding the release of the assets. Project representatives called the court’s logic legally unsound.\u00a0<\/p>\n

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“A thief does not own what they have stolen. These funds belong to the users from whom they were taken, and no one else,” stated protocol founder Stani Kulechov.<\/em><\/p>\n<\/blockquote>\n

The plaintiffs’ lawyers questioned Aave’s right to contest the freeze. They pointed to the platform’s terms of use, which state that it “owns, holds, and controls” client assets. According to the lawyers, this makes the project responsible for what happens and could weaken its position in court.<\/p>\n

The lawyers also noted that the victims are unlikely to be in dire need of these 30,766 ETH: DeFi United has already raised $327.95 million, four times the amount in question.<\/p>\n

The hearing is scheduled for May 6 in a Manhattan federal court.<\/p>\n

Kelp and LayerZero Conflict<\/h2>\n

Kelp developers stated that the April hack was due to a vulnerability in LayerZero’s infrastructure. The project plans to relaunch its cross-chain<\/a> system based on Chainlink<\/a>.<\/p>\n

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After the recent LayerZero exploit, we are taking steps to ensure rsETH is fully secure, which is why we are migrating to @chainlink<\/a> CCIP.<\/p>\n

From the April 18 incident, it is clear that LayerZero’s own infrastructure was exploited, resulting in $300M in losses across DeFi.\u2026 https:\/\/t.co\/beIrfZZLlh<\/a><\/p>\n

\u2014 Kelp (@KelpDAO) May 5, 2026<\/a><\/p><\/blockquote>\n