How to File an Emergency Motion to Vacate a Restraining Notice on Crypto Assets

Introduction

On Monday, Aave LLC—a software development firm contributing to the Aave Protocol—filed an emergency motion in the Southern District of New York. The motion seeks to vacate a restraining notice served on Arbitrum DAO, which currently locks up approximately $71 million in recovered ETH tied to the April 18 Kelp DAO exploit. This situation highlights the critical need for a clear, step-by-step legal process when dealing with court-ordered restraints on recovered crypto assets. Whether you are a DeFi protocol contributor, a blockchain developer, or a legal professional, understanding how to navigate such a motion can be essential. Below is a comprehensive guide on how to file an emergency motion to vacate a restraining notice, using the Aave/Kelp case as a real-world example.

What You Need

• Legal Representation: A qualified attorney experienced in federal litigation, particularly in the Southern District of New York (SDNY).
• Case Number and Court Documents: The original restraining order notice and any related filings from the court.
• Evidence of Legitimate Recovered Assets: Documentation proving the assets were lawfully recovered and should not be subject to restraint (e.g., blockchain transaction logs, DAO governance decisions).
• Emergency Motion Template: A draft of the motion to vacate, including supporting legal arguments (e.g., improper service, lack of jurisdiction, undue hardship).
• Service of Process: A method to serve the motion to all relevant parties (e.g., the plaintiff, Arbitrum DAO, and any other affected entities).
• Court Filing Fees: Payment for filing the emergency motion (typically $402 for civil cases in federal court).
• Time and Coordination: Ability to act quickly, as emergency motions require immediate attention.

Step-by-Step Guide

Step 1: Assess the Situation and Gather Evidence

Before drafting any motion, thoroughly review the restraining notice. Identify the court that issued it, the parties involved, and the exact assets frozen. In the Aave case, the notice targets about $71 million in ETH recovered from the Kelp DAO exploit on April 18. Your goal is to demonstrate that the assets were rightfully obtained and should not be restrained. Collect all relevant documentation, including:

• Blockchain transaction hashes showing the recovery process.
• Governance votes or smart contract actions that approved the recovery.
• Correspondence with law enforcement or other agencies.

Organize this evidence to support your claim that the restraining notice was improperly served or based on incorrect facts. Consult with your legal team to identify which arguments are strongest for your jurisdiction.

Step 2: Draft the Emergency Motion to Vacate

With evidence in hand, draft a motion that requests the court to vacate the restraining notice. The motion must include:

• Caption: Court name, case number, and parties (e.g., In re: Aave LLC vs. Arbitrum DAO).
• Statement of Facts: Clearly explain the background of the recovery, the irreparable harm caused by the restraint (e.g., loss of liquidity for the DAO), and why the notice is invalid.
• Legal Standard: Cite Federal Rule of Civil Procedure 65(b) or the specific rule governing emergency motions to vacate. Argue that the restraining notice fails to meet the standard for continued enforcement.
• Supporting Declarations: Attach sworn statements from key witnesses (e.g., Aave developers, DAO treasurers).
• Proposed Order: A draft order for the judge to sign, vacating the notice and releasing the assets.

Use clear, concise language. The Aave motion likely argued that the notice was served without proper due process or that the assets were not subject to restraint under state law.

Step 3: File the Motion with the Court

File the emergency motion electronically via the court’s Case Management/Electronic Case Files (CM/ECF) system, or in person if required by the SDNY. An emergency motion often has a separate docketing process—check the local rules. Pay the filing fee and obtain a stamped copy. The Aave team likely filed as “emergency” to expedite the hearing, so emphasize urgency in your filing.

Step 4: Serve the Motion on All Parties

Proper service is crucial. Serve the motion and all supporting documents on every party affected by the restraining notice, including:

• The plaintiff or entity that obtained the original order.
• Arbitrum DAO (or any DAO named in the notice).
• Any third-party custodians holding the frozen assets.

Use personal service by a process server, or if allowed, electronic service with the court’s permission. For the Aave case, the notice was served on Arbitrum DAO, so Aave had to ensure the motion reached the same parties.

Step 5: Prepare for and Attend the Emergency Hearing

After filing, the court will schedule a hearing, often within 24–48 hours. Prepare a concise oral argument that focuses on the key points:

• The restraining notice is causing substantial, irreparable harm (e.g., loss of operational funds for Aave Protocol).
• The recovery of assets was legitimate and transparent.
• The notice was procedurally defective (e.g., lack of proper service, no bond posted).

Bring printed copies of your evidence and any relevant case law. Anticipate counter-arguments from the opposing party. In the Aave situation, the judge might question whether the assets truly belong to the Kelp DAO or the protocol.

Step 6: Follow Up After the Ruling

If the court grants your motion, obtain the signed order and serve it on the custodian holding the assets (e.g., Arbitrum DAO or an exchange). Ensure the assets are released according to the court’s instructions. If the motion is denied, discuss with your attorney options to appeal or negotiate with the opposing party.

Tips for Success

• Act quickly: Emergency motions require rapid action. Delays can give the opposing side time to build their case.
• Engage experienced crypto counsel: Federal judges in the SDNY may not be familiar with DeFi nuances. Your attorney should explain blockchain concepts clearly.
• Preserve the status quo: Avoid moving or transferring the assets during the legal process, as that could complicate your case.
• Document everything: Maintain a timeline of events, including when the restraining notice was served and when you filed your motion.
• Consider public relations: In high-profile cases like Aave vs. Kelp, community perception matters. Communicate transparently with stakeholders.
• Check local rules: The SDNY has specific requirements for emergency motions—review them beforehand.

By following these steps, you can effectively navigate the process of vacating a restraining notice on recovered crypto assets, just as Aave LLC is attempting to do with the Kelp DAO funds.