Aave froze all DAO-operated V3 and V4 markets after suspicious activity linked to a Binance exploiter. A connected wallet deposited $60 million USDT and borrowed 19,762 WETH worth approximate
Decentralized lending protocol Aave has temporarily frozen its DAO-operated V3 and V4 markets following a potential security incident involving wallets linked to a Binance exploiter.
According to Aave risk service provider LlamaRisk, a wallet associated with the exploiter deposited approximately $60 million in USDT into Aave V3 Ethereum Core on October 29.
Between 20:58 and 21:01 UTC, the wallet borrowed 19,762 WETH, valued at roughly $44.6 million.
The transactions occurred approximately 40 minutes before the first market freeze.
The Aave V3 V4 freeze was introduced as a precaution while the situation is investigated.
Importantly, Aave stated that its smart contracts were unaffected.
The protocol has not reported that the suspicious activity resulted from a vulnerability in Aave’s contracts.
The precautionary action covers a substantial portion of Aave’s DAO-operated lending infrastructure.
According to the reported figures, the freeze affects:
That brings the total to 292 frozen reserves across the two versions.
The Aave V3 V4 freeze prevents users from making new deposits or opening additional borrowing positions in the affected markets.
However, existing users can still withdraw their assets and repay outstanding loans.
This distinction matters because a market freeze does not necessarily mean customer funds are inaccessible.
Aave’s response is designed to limit additional exposure while allowing users to manage existing positions.
The wallet linked to the Binance exploiter reportedly holds only one position on Aave.
LlamaRisk also confirmed that the position remains over-collateralized, meaning the value of its deposited collateral exceeds the value of its outstanding loan.
Aave Freezes V3 and V4 Markets After Binance Exploiter Deposits $60M USDT and Borrows 19,762 WETHAave risk service provider LlamaRisk said one wallet linked to the Binance exploiter deposited about 60 million USDT into Aave V3 Ethereum Core and borrowed 19,762 WETH (worth… pic.twitter.com/rqvcSXknCS
— Wu Blockchain (@WuBlockchain) October 30, 2026
The Aave V3 V4 freeze highlights how decentralized finance protocols can respond to unusual activity even when their underlying contracts remain secure.
Lending platforms must consider risks beyond smart contract vulnerabilities, including suspicious collateral movements and potential liquidation scenarios.
Aave said it intends to lift the restrictions as soon as possible.
However, no confirmed reopening time has been provided.
Users with existing positions should monitor official Aave communications for updates on market availability.
They should also review their collateral and borrowing positions, particularly if market volatility increases.
For now, Aave’s precautionary freeze affects 292 reserves, but withdrawals and repayments remain operational.
The incident underscores the importance of risk monitoring in decentralized lending, where suspicious activity involving external wallets can trigger platform-wide protective measures.
