Terror victims reframe $71M Aave exploit as fraud — not theft — in Manhattan court battle

Attorneys representing victims of North Korean terrorism filed a 30-page opposition brief Tuesday in the Southern District of New York, arguing that April's $71 million rsETH exploit on Aave was fraud rather than theft. The distinction is legally significant: under U.S. common law, a fraudster who acquires property through deception can obtain defeasible title to it — meaning the attacker, attributed to Lazarus Group, may have technically "owned" the borrowed ether, complicating Aave's bid to void the restraining notice freezing the funds.

The filing also invokes the Terrorism Risk Insurance Act, a post-9/11 statute allowing terrorism judgment creditors to seize U.S.-held property of state sponsors of terror. If the court accepts that framing, New York property-law arguments Aave has raised may become secondary. The brief further challenges whether Aave has standing to contest the…