Aave Liquidates Hacker’s Positions on Ethereum and Arbitrum

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Aave Labs has liquidated the Kelp DAO hacker’s rsETH positions on Ethereum and Arbitrum as “a critical step in the recovery roadmap.”

These funds are linked to the April 18, 2026, theft of over 116,000 rsETH (valued around $292 million) from the Kelp DAO liquid staking protocol.

Aave said on Wednesday that the liquidations did not affect user funds. Moreover, it didn’t utilize its insurance mechanism Umbrella. Overall, the goal was to release 13,000 ETH worth some $30 million.

According to the plan by DeFi United, a coalition working to restore the backing of rsETH, as of the end of April, there were seven addresses associated with the exploiter. These held active restaked ETH (rsETH)-backed positions on Aave and Compound. They represented 107,000 rsETH of the stolen 116,500 rsETH.

“The recovery effort focuses on two objectives: (1) restoring the backing of rsETH, and (2) clearing up the affected positions in liquidity markets to recover approximately 107,000 rsETH in excess collateral and resolve the resulting market impairment,” the collation stated.

Meanwhile, the liquidated collateral from Ethereum and Arbitrum now sits with the Recovery Guardian, a multisignature wallet managed by DeFi United.

10% short due to legal obstacles

Thaddeus Pinakiewicz, vice president of Galaxy Digital’s research team, said on Thursday that DeFi United is about 10% short of the ETH they need to restore the Kelp DAO rsETH.

However, there is currently an issue with another 30,765 ETH that has been frozen by the Arbitrum Security Council. Gerstein Harrow LLP served Arbitrum DAO with a restraining notice. It claimed that the funds are tied to North Korean hackers and are owed to the law firm’s clients.

In response, Aave filed an emergency motion on Monday. The team stated that the money belongs to the victims of the exploits, and that “a thief does not gain lawful ownership of stolen property simply by taking it.”

Meanwhile, DeFi United has to wait for commitments from Circle, Ethena, Frax, and Kraken-built Ethereum layer 2 Ink. “Aave would need those to get it over the line and plug the hole,” Pinakiewicz said.