Aave's rsETH Recovery Hits Phase II — Attacker Liquidated, $71M ETH Frozen by North Korea Judgment!

Aave has launched Phase II of its rsETH recovery plan, confirming the attacker's Aave V3 positions were fully liquidated on May 6. The move marks a significant step toward restoring normal operations following the exploit that inflated rsETH supply and disrupted bridge withdrawals.

The Arbitrum DAO voted to return $71 million in recovered ETH to affected Aave users, but the transfer hit an unexpected legal snag: plaintiffs holding a court judgment against North Korea temporarily froze the funds. A court has since permitted the restricted assets to be transferred to Aave LLC, clearing the path for eventual distribution.

While the legal process plays out, Aave will borrow funds to cover the interim shortfall rather than leave users exposed. The protocol will also burn the liquidated rsETH to neutralise the hacker's artificially inflated supply, with bridge withdrawals and full normal…