Judge delays ruling on release of $71 million in frozen ETH

A New York federal judge has delayed a decision on a request to release $71 million in frozen cryptocurrency, extending a legal dispute over funds tied to one of the largest decentralized finance (DeFi) exploits this year. Judge Margaret M. Garnett of the U.S. District Court for the Southern District of New York ordered both sides in the case to submit additional legal arguments, postponing a ruling until at least a hearing scheduled for June 5.

The dispute centers on approximately 30,765 Ether (ETH), frozen on the Arbitrum blockchain in April. The assets were traced to a late April exploit of the Kelp DAO protocol, which resulted in losses estimated at $293 million. The funds were frozen by Arbitrum’s Security Council in an emergency action to prevent their further movement. Aave, a DeFi lending protocol involved in recovery efforts, filed an emergency motion seeking to unfreeze the $71 million in ETH, arguing the assets are critical for mitigating user losses and stabilizing the ecosystem. Aave warned that keeping the funds locked could trigger user liquidations and create broader market instability.

However, the law firm Gerstein Harrow LLP filed a restraining notice on the...