[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.

Pay

... please visit link below to view full proposal

https://tally.xyz/gov/arbitrum/proposal/71236395575275509514809232906539225896862899916501711888027988560774655719183