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20 Apr 2026, 09:27

A $300 million borrowing spike on Aave signals liquidity crunch after exploit

The aftershocks of the Saturday's KelpDAO hack are spreading through stablecoin markets in ways that were not immediately obvious.

20 Apr 2026, 09:08

Aave Hit by KelpDAO rsETH Hack, AAVE Price Slides Below $100

Aave saw almost $8.88 billion being wiped out from TVL in 48 hours. Fake collateral from KelpDAO allowed more than $200 million in borrowing, which caused panic exits and drained ETH. $AAVE is trading at a price less than $100 as of now. Aave, a DeFi platform that is known for its lending protocol, is reeling from a massive liquidity crisis triggered by the KelpDAO rsETH exploit, with billions in TVL disappearing overnight and core markets frozen at 100% utilization. rsETh Hack Sparks Panic Withdrawals All of this started as attackers minted fake rsETH tokens, unbacked liquid restaking tokens (LRTs), and used them as collateral on Aave to borrow more than $200 million in real ETH. Aave quickly posted on social media platform X, “rsETH on Ethereum mainnet is fully backed,” but out of caution, froze rsETH across V3 and V4. The platform also capped exposure and halted WETH reserves on Ethereum, Arbitrum, Base, Mantle and Linea. The team is “actively validating information and assessing potential resolutions.” What started as a $292 million KelpDAO breach quickly snowballed. Whales like Justin Sun and MEXC exchange pulled billions in liquidity first, and this drained ETH, USDT and USDC markets. Crypto influencer Duonine warned that all core markets are at 100% utilization, that includes $3 billion in USDT and $2 billion in USDC stuck and one cannot withdraw their money. ETH depositors cannot get out directly, though some sell aETH-wETH on Uniswap at a loss. USDT/USDC holders face worse: borrow against them at 75-90% via GHO/DAI/USDe, but cascading utilizations lock more markets. TVL Plunges $8.88 Billion in 48 Hours According to DeFiLlama , Aave’s TVL has also come down from $26.4 billion to $17.52 billion, which is a $8.88 billion drop in two days. EmberCN noted $10.1 billion outflows from Aave alone, including $4.5 billion in stablecoins, pushing 13.4% APY rates sky-high as depositors flee. Bots snatch any fresh liquidity instantly, like $250,000 USDC vanishing in seconds. This is not just a hack, it is a DeFi stress test that is exposing interconnected risks in restaking, bridges, and lending. Liquidations stall since markets cannot process ETH sales if prices crash, amplifying bad debt risks, currently $177M-$236M from rsETH, a “hot potato” for Aave stakers, governance, or users. $AAVE Token Tumbles Amid Trust Erosion $AAVE’s price has dropped significantly and is currently trading below the $100 mark. At press time, the price of the token stands at $92.39 with a dip of 0.2% in the last 24-hours as per CoinMarketCap . The price before this exploit was hovering around the $120 mark. The current price indicates the eroded confidence and trust within the platform and its token. AAVE 24-hours chart High utilization signals panic. Rumours swirl of governance conflicts in onboarding rsETH, despite its hundred of millions in collateral allowing the massive borrow. Contagion looms large. Protocols that rely on Aave for yields are all stuck and this will lead to bad debt. Crypto influencer Duonine warned “If you didn’t remove your assets, you risk receiving at least part of that bill.” Flat markets spared immediate liquidations, but volatility could worsen it. Governance and Recovery Paths Ahead After the entire incident, what comes to mind is who pays for this loss? The options are Aave’s safety module (where stakers take a cut), a governance vote, or losses being shared with KelpDAO users and L2 platforms. Critics are calling the rsETH onboarding a “DeFi risk failure” pointing out how risky it is to stack multiple layers, staking, restaking, LRTs, and lending, just to earn yield. Aave now needs to bring back liquidity quickly, possibly with big players adding funds, to stop the situation from getting any worse. People are leaving and stating that the risk is not worth the small return. As Aave works on the fixes, time is critical, with billions locked and users’ trust at stake. Also Read: Polkadot Price Recovers as Hyperbridge Raises Exploit Loss to $2.5M

20 Apr 2026, 08:04

AAVE price turns bullish as team moves to contain the KelpDAO exploit

Aave has shown signs of stabilisation after a sharp decline triggered by the KelpDAO exploit that rattled confidence across decentralised finance markets. The token, which had fallen sharply amid panic-driven selling and liquidity stress, is now trading around $92.30, slightly up 0.5%, suggesting that immediate fear-driven pressure has eased. The recovery in sentiment is not coming from a single catalyst but rather a combination of containment efforts by the Aave team and early signs that liquidity conditions, while still fragile, are no longer deteriorating at the same pace. After a wave of withdrawals and forced deleveraging, the market appears to be reassessing whether the worst-case scenario is already priced in. What happened in the KelpDAO exploit The KelpDAO crisis began on April 19 after a vulnerability in KelpDAO’s rsETH bridge was exploited to mint approximately 116,500 unbacked rsETH tokens, valued at nearly $280M–$293M. These tokens were not backed by real assets, but they were still accepted within DeFi lending flows, including Aave’s collateral system. The attacker deposited the fake rsETH into Aave and borrowed real ETH against it, extracting roughly 106,000 ETH in liquidity. This mechanism effectively converted counterfeit collateral into real value, leaving Aave exposed to a growing imbalance in its lending positions. As ETH utilisation on Aave surged to 100%, users were warned that withdrawals could become constrained. That warning triggered panic. Within hours, withdrawals accelerated to more than $5.4B–$6.6B, with a significant portion coming from stablecoins and large holders. Reports also indicated that TRON founder, Justin Sun , was among those who withdrew capital during the turbulence. The direct consequence of this structure was the creation of an estimated $177M–$200M+ in bad debt, meaning Aave was left holding liabilities backed by collateral that had lost its integrity. Aave team move to contain the damage Following the exploit, Aave’s response focused on isolating the risk and preventing further contagion across its lending markets. The most decisive step was the immediate freezing of rsETH-related markets across Aave V3 and V4. https://twitter.com/aave/status/2045593585966252377?s=20 This action removed the compromised asset from active borrowing and halted any additional exposure linked to it. The protocol also pushed ETH-related markets into emergency management mode as utilisation spiked dangerously close to full capacity. By restricting further borrowing activity, Aave aimed to stop the situation from escalating into a full-scale liquidity breakdown. At the same time, the team began assessing whether its Umbrella safety mechanism could absorb part or all of the bad debt. This reserve system is designed to act as a backstop during extreme stress events, and its potential deployment has become a key factor in stabilising sentiment. However, uncertainty remains. Estimates suggest that even after early containment measures, Aave still carries around $196M–$230M in unresolved exposure, depending on how liquidation and recovery processes unfold. Despite these pressures, the containment strategy has prevented a total system breakdown. Liquidity continues to function, albeit under strain, and markets have avoided a complete freeze of lending activity. Market reaction and broader pressure The impact of the KelpDAO exploit extended beyond the immediate incident, coinciding with broader pressure across the crypto market. Geopolitical tensions involving the United States and Iran added to a risk-off environment, weighing on speculative assets. Against this backdrop, Aave’s token saw a sharp reaction, falling nearly 18% in the immediate aftermath as traders repriced risk. Over a longer period, the token remains down more than 17% over the past month and over 35% year on year, indicating that market confidence is still recovering rather than fully restored. At the same time, Aave’s total value locked has declined significantly, falling from levels above $26B to around $17.5B according to DeFiLlama , reflecting sustained outflows even after the initial panic subsided. While the pace of withdrawals has slowed, capital has not yet returned in meaningful size. AAVE price outlook From a technical perspective, Aave is currently trading in a critical range. The price of $92.30 places it just below a key resistance zone at $95.44, while maintaining short-term support around $80.35. Below that, a deeper support level is located near $75, which analysts describe as an institutional demand zone that could be tested if confidence weakens further. A sustained break above $95.44 would signal early recovery momentum, opening the path toward $115.57 and potentially $129.18, where stronger resistance levels are expected. However, failure to hold current support could see the price retest $80, and in a more severe scenario , drift toward $65.58, where historical buying interest previously emerged. In the near term, analysts note that the market remains in a consolidation phase between $132 and $89.78, with direction likely to be determined by how effectively Aave’s safety mechanisms absorb outstanding bad debt and whether liquidity stabilises in the coming weeks. While the general trend remains bearish with the token trading below all exponential moving averages (including the 10-day, 20-day, 50-day, 100-day, and 200-day EMAs), the RSI (14) currently stands at 43.72, which reflects a neutral market stance. This suggests traders are still indecisive, with price action lacking a clear catalyst strong enough to drive a sustained trend in either direction. On the higher timeframe, the weekly RSI is positioned at 30.62, placing Aave in oversold territory based on closed weekly candles. This signals that while selling pressure has been dominant, conditions may be approaching levels where longer-term buyers typically begin to re-emerge. For now, Aave’s recovery remains conditional. The worst of the panic appears to have passed, but the market is still waiting for a clear resolution to the aftermath of the KelpDAO exploit before a sustained bullish trend can fully take hold. The post AAVE price turns bullish as team moves to contain the KelpDAO exploit appeared first on Invezz

20 Apr 2026, 07:22

Axios: US intelligence uses Anthropic’s Mythos AI despite Pentagon ban

US intelligence agencies are actively deploying advanced artificial intelligence tools from Anthropic despite a formal Pentagon designation labeling the firm a “supply chain risk,” according to a new report highlighted by Axios . At the center of the controversy is Anthropic’s Mythos Preview model , which sources say is currently in use at the National Security Agency (NSA). The development exposes a growing divide within the US government over how to balance rapid AI adoption with internal security restrictions. The Pentagon blacklisted Anthropic earlier in February 2026 after a dispute over AI safeguards and military use, formally warning that its systems posed a potential supply-chain vulnerability. However, intelligence officials appear to be prioritizing Mythos’ capabilities, particularly in cybersecurity, over those concerns. According to sources, the National Security Agency (NSA) has adopted Mythos, as have other units within the Department. So far, the specifics of the NSA’s use of Mythos are not publicly known, but elsewhere the model is largely being used to scan internal environments for security flaws. The model is considered one of the most advanced AI systems available, with strong “agentic” abilities that allow it to autonomously analyze and exploit complex systems. Reports of NSA and DOD use come days after insiders said the White House was negotiating access to Anthropic’s Mythos model even as efforts to blacklist the company continued. More recently, CEO Dario Amodei also confirmed that the firm has been in contact with government officials and is open to collaboration. Some agencies argue that limiting access to such powerful AI could put the US at a strategic disadvantage, particularly against geopolitical rivals. However, experts warn that the same capabilities that make Mythos valuable for defense could also introduce new risks. Its ability to uncover vulnerabilities at scale could be weaponized if misused, raising concerns about escalation in cyber warfare. White House officials met with Amodei to discuss Mythos use in government operations Only about 40 vetted organizations are permitted to use Mythos. Of the 40 groups, only 12 are publicly known, and the NSA is reportedly tucked away in the unlisted majority. In the U.K., agencies similar to the NSA also noted they have access to the model through their national AI Security Institute. Anthropic describes Mythos as remarkably powerful in cybersecurity, capable of spotting deeply embedded bugs and independently exploiting them. This combination of advanced detection and autonomous analysis has already raised both interest and concern among policymakers. On Friday, Amodei met with White House chief of staff Susie Wiles and Treasury Secretary Scott Bessent to discuss how the model can be safely integrated into government infrastructure. Despite the White House’s public friction with Anthropic, this meeting highlights that the model’s power is simply too valuable for federal security needs to pass up. Both sides characterized the talks as productive. The White House even shared, “We discussed opportunities for collaboration, as well as shared approaches and protocols to address the challenges associated with scaling this technology.” Anthropic filed a lawsuit to counter the supply chain risk designation Anthropic fired back at the Pentagon in March, filing a lawsuit to overturn the supply chain risk designation that threatened its government contracts. This was the first time the “not secure enough” tag has been pinned on a domestic provider, effectively barring their tools from standard government use. Anthropic’s legal team has branded the “risk” designation a revenge tactic after Amodei denied the DoD’s request to integrate the AI into fully autonomous weapons systems and mass domestic surveillance. As earlier reported by Cryptopolitan, a California district court judge sided with Anthropic and temporarily blocked the “supply chain risk” label. Still, a federal appeals court has since overturned that stay, keeping the designation in place for now. In the early days of the blacklist efforts, President Donald Trump had claimed that the radical leftists running the firm were trying to dictate terms to the Defense Department. He argued, “We don’t need it, we don’t want it, and will not do business with them again!” At the moment, some in the DoD still believe Anthropic’s refusal to cooperate fully proves they would unplug their tech during a war, making them a flight risk in combat. However, other administration officials are eager to bury the hatchet just to get their hands on the company’s superior tech. Still letting the bank keep the best part? Watch our free video on being your own bank .

20 Apr 2026, 06:51

After $290M KelpDAO Breach, LayerZero Scrambles to Shield Network

The KelpDAO attack was possible because the DeFi platform used only 1-verifier setup instead of multiple. Hackers used fake data and DDoS to trick the system. LayerZero issued a statement and confirmed that the issue was isolated and no other apps or assets have been affected. LayerZero has issued a detailed statement today, April 20, 2026, regarding the massive $290 million exploit which targeted KelpDAO’s rsETH assets on April 18, 2026. This attack, attributed to North Korea’s notorious Lazarus Group, specifically the TraderTraitor subgroup, exposed vulnerabilities in single verifier setups. https://t.co/3vIHs3Xgs4 — LayerZero (@LayerZero_Core) April 20, 2026 Crucially, LayerZero in the statement stressed on the fact that its protocol worked perfectly, containing the damage to just one asset all because of its modular security design. Ripple CTO David Schwartz called it “way more sophisticated than I expected,” blaming KelpDAO’s laziness in security configuration. The attack was way more sophisticated than I expected and aimed at LayerZero infrastructure taking advantage of KelpDAO laziness. https://t.co/eunWHvBPl6 — David ‘JoelKatz’ Schwartz (@JoelKatz) April 20, 2026 Attack Isolated to KelpDAO’s Risky Setup The breach hit KelpDAO’s rsETH, a restaked ETH token bridged via LayerZero’s protocol. KelpDAO had configured its OApp, a LayerZero tool for cross-chain apps, with a “1-of-1” Decentralized Verifier Network (DVN) setup. This meant that it relied solely on LayerZero Labs’ DVN as the single point of trust, ignoring repeated warnings for multi-DVN redundancy. DVNs are like independent referees checking cross chain messages to prevent fakes. LayerZero’s architecture lets apps pick multiple DVNs for consensus, think of it as needing two or three witnesses to confirm a transaction, not just one. KelpDAO’s solo DVN choice created a single point of failure. LayerZero confirmed no other assets or apps were affected, and called it a zero contagion after a full review. How the hack Unfolded: RPC Poisoning an DDoS The assault was a masterclass in stealth. Suspected Lazarus hackers did not crack the protocol or steal keys. Instead, they poisoned LayerZero Labs’ downstream RPC (Remote Procedure Call) infrastructure, the nodes that fetch blockchain data. Attackers first got the list of RPC nodes LayerZero’s DVN used. They hacked two independent op-geth nodes (Ethereum clients) on separate clusters, swapping binaries with malicious versions. These nodes lied only to the DVN, telling the truth to outsiders like LayerZero’s scanning tools to dodge detection. Later on, LayerZero’s DVN uses redundant internal and external RPCs for trust minimization. To bypass healthy ones, hackers launched DDoS attacks, forcing failover to the poisoned nodes. Then the bad RPCs fed a custom payload forging a fake cross-chain message. The DVN, seeing only tainted data, verified non-existent rsETH transactions, draining $290 million. The malware self-destructed post-attack, wiping logs and disabling nodes. LayerZero shared traffic graphs which showed DDoS spikes, indicating RPC verification’s limits, a risk for all offchain services like bridges. LayerZero’s Robust Defenses Held Firm LayerZero in the statement stressed that they have a strong security in place. This include constant monitoring of devices, giving employees only the access they actually need, and keeping systems separate so one issue does not affect everything. They also have a team watching things 24/7 and work with outside security experts. They are also close to getting a major security certification (SOC 2). They explained that their system uses a mix of their own servers and third-party ones, which helped limit how much damage the attack could cause. Importantly, there was no flaw in the main protocol itself, the design helped contain the problem. LayerZero also confirmed that all the affected servers have been removed and replaced, and the system is now fully up and running again. Path Forward: Multi-DVN Mandate and Global Hunt LayerZero urges all single-DVN apps to upgrade, refusing to verify 1/1 setups. They are contacting partners, aiding Seal911 in fund tracking, and cooperating with law enforcement worldwide. This incident spotlights state-sponsored threats evolving beyond code exploits to infrastructure sabotage. For users, it reinforces, diversifying verifiers like you would spread risk in a portfolio. LayerZero’s checklist demands multi-DVN for integrations, KelpDAO ignored it at all their peril. The crypto world watches as investigators now chase the Lazarus funds. Even though there was no systemic risk, this incident does act as a wake up call for lazy configs in DeFi’s high stake games. Also Read: Pi Network Price Dips as Testnet Rolls Out First Smart Contract

20 Apr 2026, 06:22

292 million dollars lost in massive Kelp DAO hack

🚨 Kelp DAO suffered a $292 million hack, DeFi’s largest in 2024. The attack exploited a single-node setup in $ETH’s LayerZero bridge. Continue Reading: 292 million dollars lost in massive Kelp DAO hack The post 292 million dollars lost in massive Kelp DAO hack appeared first on COINTURK NEWS .