Following the massive hack of the KelpDAO project amounting to $293 million, the lending protocol Aave found itself under threat. As a result of the incident, the Aave team decided to freeze the rsETH and wrsETH markets in versions V3 and V4, which limited operations; however, users retained the ability to withdraw assets as long as there was liquidity.
This is reported by Business • Media
Large Withdrawals Associated with Justin Sun
Amid the crisis, according to Arkham Intelligence, two addresses likely linked to the well-known crypto entrepreneur Justin Sun withdrew over $402.8 million from Aave. Within the first 21 minutes after the markets were frozen, a wallet identified as HTX Recovery Hot Wallet transferred $276.8 million in USDT from the protocol. This wallet is believed to be controlled by Sun.
Additionally, from his personal wallet, Sun withdrew another 53,665 ETH (approximately $126 million), which was deposited into the Spark protocol. Overall, according to EmberCN analyst estimates, the entrepreneur not only managed to swiftly transfer large sums without delays but also directed around $2.13 billion into Spark and Sky. Other Aave users were forced to sell their aEthWETH (deposit tokens) at a discount due to protocol restrictions, losing part of their value during the exchange.
“It is noteworthy that the entrepreneur was able to withdraw assets without significant issues, while others were forced to do so through intermediaries and at a discount.”
Impact of the Crisis on Users and the Market
After the freezing of the Aave markets, some users lost significant amounts due to the forced sale of aEthWETH below par value. For instance, one owner disposed of 310 ETH in such a transaction. At the same time, the situation opened opportunities for others — according to EmberCN, one of the major players (whale) managed to earn 143 ETH by buying aEthWETH at a discount.
Amid the chaos, Justin Sun also reached out to the KelpDAO hacker via his X page, offering to determine the reward for the return of funds. According to the entrepreneur, the criminal will not be able to spend the stolen $300 million, making agreements more feasible for both parties.