Aave Begins Phase II Recovery After Liquidating Lazarus-Linked rsETH Positions

May 9, 2026

< 1 min read

by Anisha Pandey

for CoinEdition

Aave Begins Phase II Recovery After Liquidating Lazarus-Linked rsETH Positions

AI Overview

Aave liquidated 8 hacker-linked rsETH positions on May 6 across Ethereum and Arbitrum after an exploit that allowed attackers to borrow nearly $230M in ETH using unbacked rsETH; recovered collateral was transferred to the Recovery Guardian under an Aave DAO governance proposal. A Manhattan federal judge approved transfer of $71M in frozen ETH to support recovery; Aave will burn the seized rsETH and retire the related LayerZero packet — a DeFi security and protocol recovery update (crypto, Aave, rsETH, LayerZero, governance).

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Aave liquidated 8 hacker-linked positions tied to the rsETH exploit on Aave V3.
A Manhattan federal judge allowed the transfer of frozen $71M in ETH to support recovery.
Aave will burn the seized rsETH and retire the related LayerZero packet.

Aave has moved into the second phase of its rsETH recovery plan after liquidating the hacker-linked positions tied to last month’s exploit on Aave V3 across Ethereum and Arbitrum.

In an update posted on X, the protocol confirmed that the thief’s eight identified positions were liquidated on May 6. The recovered rsETH collateral was transferred to the Recovery Guardian under a governance proposal previously approved by the Aave DAO.

The exploit, linked to North Korea’s Lazarus Group, allowed attackers to use unbacked rsETH as collateral to borrow nearly $230 million in ETH from the protocol. Arbitrum’s Security Counc…

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