Aave has liquidated the hacker Kelp's positions involving rsETH as part of a recovery plan, pooling funds for compensation efforts.
Aave has successfully liquidated the remaining positions of the hacker known as Kelp involving rsETH, following a community-approved recovery strategy.
According to Aave's announcement, the liquidation of Kelp’s positions took place on both Ethereum and Arbitrum, with the liquidated collateral now held by the Recovery Guardian as per the approved proposal. Importantly, this action did not impact any other users.
The funds obtained from this liquidation process are being moved to a multi-signature wallet managed by the DeFi United fund, which aims to restore the rsETH collateral and provide compensation to those impacted.
Details of the Liquidation Process
The liquidation was only initiated after receiving approval from the Aave community, where over 90% of participants backed the decision. The DAO had temporarily altered the oracle price of rsETH, creating a deficit for the hacker, which permitted the liquidation to proceed. The parameters were then reverted back to their original state.
Ongoing Recovery Efforts
As of now, the DeFi United initiative has accrued over $320 million in contributions from various industry stakeholders, with Arbitrum providing the bulk of this amount by freezing 30,766 ETH in the aftermath of the hack. A vote by the project's DAO to transfer these funds to the recovery effort received strong support, with 90.5% voting in favor.
However, complications arose as a New York court has restricted Arbitrum's access to the frozen assets, which are also claimed by victims of a 2015 theft linked to North Korean hackers. Aave has criticized the court's ruling as legally questionable and is pushing for the restrictions to be lifted, while the plaintiffs question Aave's standing in the case.
The incident is part of a troubling trend, as hackers recently targeted market maker TrustedVolumes, resulting in a theft of $6 million, marking the fifth hacking incident within the month.
