Ether Withdrawals to Resume Following KelpDAO and Aave's Coordinated Token Burn

"The attack began on April 18, when an unknown attacker exploited KelpDAO's Layerzero bridge (a cross-chain messaging system) and fraudulently minted 116,500 rsETH tokens without backing them with real assets. The attacker then deposited roughly 89,500 of those tokens into Aave V3 as collateral and borrowed wrapped ether against them, generating over $190 million in undercollateralized positions and leaving Aave V3 potentially exposed to up to $230 million in losses."

"Aave's community moved quickly, freezing rsETH markets on both Ethereum and Arbitrum to contain the damage. Recovery began in earnest on May 6, when the attacker's eight positions on Aave V3 were liquidated across Ethereum and Arbitrum. As part of Phase II of the recovery plan, the liquidated rsETH on Arbitrum has now been burned, permanently removing the fraudulently minted tokens from circulation and restoring integrity to the rsETH supply."

"The rsETH bridge lockbox on Arbitrum is being refilled, and ether withdrawals for users affected by the KelpDAO exploit are expected to start within 24 hours, marking the final phase of one of decentralized finance's most complex coordinated recoveries. Aave co-founder Stani Kulechov confirmed ETH withdrawals will normalize within 24 hours of the Arbitrum burn step."

"Recovery is partially complicated by a U.S. court's prior freeze on $71M in ETH, claimed to be linked to North Korea's Lazarus Group. A U.S. federal judge cleared the transfer of $71 million in recovered ETH to Aave as part of this fin"

An attacker exploited KelpDAO’s Layerzero bridge on April 18, minting 116,500 rsETH tokens without backing. About 89,500 rsETH were deposited into Aave V3 as collateral, enabling borrowing of wrapped ether and creating undercollateralized positions worth over $190 million, with potential Aave V3 losses up to $230 million. Aave’s community responded by freezing rsETH markets on Ethereum and Arbitrum. Recovery accelerated on May 6 when eight Aave V3 positions were liquidated across both networks. In a Phase II step, the liquidated rsETH on Arbitrum was burned to permanently remove the fraudulent tokens and restore rsETH supply integrity. The Arbitrum bridge lockbox is being refilled on a 1:1 basis, while ETH withdrawals are expected to normalize within 24 hours, though a U.S. court freeze of $71 million in ETH linked to Lazarus Group partially complicates recovery.

Read at news.bitcoin.com