Aave Reopens Lending Markets After Binance Incident, Keeps 9 Assets at Zero LTV
Key Facts
Aave reopened lending markets on its V3 and V4 versions on October 30, following a precautionary freeze linked to the Binance incident, while keeping 9 assets at a loan-to-value ratio of zero, according to a Cryptopolitan report. The restrictions prevent the nine assets from being used as collateral for new borrowing, while deposits and borrowing resumed in the markets that reopened. The report said the restricted assets are USDT, USDC, USDT0, POL, WAVAX, sAVAX, XAUT, PAXG and OP. LlamaRisk said in a report published on Aave’s governance forum that the freeze aimed to prevent the incident’s exploiter from opening new deposit or borrowing positions. It added that users remained able to repay and withdraw, and that liquidations continued during the freeze.
The freeze covered 175 reserves on V3 across 16 networks and 117 reserves on V4 across 4 networks, according to LlamaRisk. Its transactions were executed between 21:42 and 23:04 UTC on October 29. The report said the Horizon real-world asset market remained open because its collateral is permissioned and the exploiter could not use it. It also said no market was fully halted, distinguishing the measure from a blanket suspension of lending services. According to LlamaRisk, the position linked to the exploiter was its only position on Aave across networks and versions, remained subject to normal liquidation, and did not put liquidity providers at risk.
The LlamaRisk report explained the incident’s connection to the lending protocol, saying that a wallet within the exploiter group deposited 60 million USDT as collateral in the Aave V3 market on the Ethereum network and borrowed 19,762 WETH. The borrowed tokens were valued at about $44.6 million at the time of borrowing. In the October 30 report, the USDT collateral was valued at about $59.9 million, against debt estimated at about $43.8 million. LlamaRisk described the position as overcollateralized and said it remained subject to normal liquidation rules. The report concluded that the position did not put Aave liquidity providers at risk.
Binance estimated the incident’s overall impact at about $6.3 billion and said in its update through October 30 that about $3 billion of affected assets had been frozen on-chain. The company announced that it had allocated more than $6.34 billion of its own funds to cover losses, and that more than $5 billion in assets matching those stolen were already available. Binance estimated that the available assets covered about 80% of the stolen funds, in addition to what had been frozen on-chain. The company said it would bear the financial impact “and would not pass it on to users.” The overall impact estimate refers to the scale of the incident as announced by Binance; the company did not describe it as final, unrecovered losses.
In its initial explanation, Binance said the breach may have begun with a compromised laptop belonging to a DevOps engineer, which allowed the attacker to access a service container and send unauthorized withdrawal transactions. The company said it had found no evidence that private wallet keys had been compromised. In a later update, it said its investigation had uncovered additional points of compromise, while evidence of those keys being compromised remained absent. It said deposits and other unaffected services continued to operate, while withdrawals were suspended. The Associated Press also reported that Circle froze tokens linked to the incident worth more than $800 million, and that Tether said it had frozen more than $1.5 billion.
Cryptocurrency prices fell as news of the incident emerged. The Associated Press reported that Bitcoin fell 3.2% on the evening of October 29 to below $79,000. On October 30, Bitcoin hit a 6-week low of $76,368, while Ether fell more than 3% to a 2-month low of $2,178 before the market stabilized, according to Reuters. AAVE closed at $133.8 on October 27 and $134.07 on October 28, then fell to $119.35 on October 29. The closing price rose to $129.16 on October 30 and reached $129.56 on October 31, according to EL7 data. These moves place the reopening of Aave markets in the context of market volatility recorded on the same days, alongside the continued collateral restrictions on the nine assets.
Binance said it was targeting a gradual resumption of withdrawals within about 34 hours of its October 30 update, and expected to share additional technical findings within about 48 hours after verification. It set Monday, November 2, 2026, as the date for publishing the initial results of its proof-of-reserves snapshot. The company said its investigation into the additional points of compromise uncovered in its subsequent review was continuing. In its 2025 annual report, Binance said it had 335 million registered users globally and held about $162.8 billion in assets under custody. Markets are therefore watching for the proof-of-reserves update and the path to resuming withdrawals, while the nine assets on Aave remain ineligible as collateral for new borrowing.