Aave Freezes 292 Reserves Across V3 V4 Following Binance Breach

TL;DR

• Aave froze 292 reserves across its V3 and V4 markets following the Binance hack. The restrictions affect 16 blockchain networks.
• Before the freeze, a wallet linked to the attacker deposited $60 million in USDT and borrowed 19,762 WETH, initially valued at approximately $44.6 million.
• Binance froze approximately $3 billion in stolen assets and pledged to cover all losses. Aave will maintain the restrictions until the attackers’ activity stabilizes.

Aave froze 292 reserves across its V3 and V4 markets following the attack on Binance wallets, which allowed the attackers to steal more than 195,000 ETH and other digital assets across multiple blockchains.

The measure affects 16 networks, including Ethereum, Arbitrum, Avalanche, Base, Optimism, Polygon, and BNB Chain. Users can repay loans and withdraw collateral, but cannot make new deposits or borrow additional funds.

Security teams from Aave Labs, Tokenlogic, and Certora coordinated an emergency response to prevent the attackers from using stolen funds within the protocol.

Aave Blocks New Lending After Detecting Attacker Activity

Before the restrictions took effect, a wallet linked to the attacker deposited $60 million in USDT into Aave V3 Ethereum Core and borrowed 19,762 WETH, initially valued at approximately $44.6 million.

Analysts confirmed that the position remains sufficiently collateralized: $59.9 million in USDT backs $43.8 million in debt. Therefore, it poses no direct insolvency risk to liquidity providers and remains subject to standard liquidation mechanisms.

Security teams implemented the measures between 4:42 p.m. and 6:04 p.m. U.S. Eastern Time. They froze 175 Aave V3 reserves across 16 networks and another 117 V4 reserves across four networks.

The freeze was implemented through emergency multisignature wallets, without waiting for a governance vote. The institutional Horizon market, which focuses on real-world assets, remains operational.

Aave is also monitoring addresses linked to the attacker and the Chainlink price oracles used by its markets.

Binance Freezes $3 Billion and Prepares to Restore Services

Binance reported that approximately $3 billion in affected assets had already been frozen through cooperation with its partners. The exchange also confirmed that it had identified additional points of compromise after initially investigating a possible breach of an engineer’s laptop.

The company said unauthorized transfers stopped after it suspended withdrawals. Deposits remain operational, and Binance is maintaining its target of restoring withdrawals within the previously announced 45-hour window.

It also pledged to cover all losses using its SAFU fund and corporate resources.

The incident also coincided with sharp market declines. Bitcoin fell to $76,320 and Ethereum to $2,170, while AAVE and LINK dropped 9%, UNI declined 8%, and ARB fell 6%.

Aave’s GHO stablecoin briefly slipped to $0.997 after users swapped 4.6 million GHO for USDT.

Aave developers will evaluate a gradual reopening of the reserves once Binance provides further updates on containing the attack and activity across wallets linked to the attackers stabilizes.