Did This Binance Hacker Just Outsmart Tether and Circle?

This is among the craziest DeFi moves I've come throughout.

Right here's what allegedly happened:

Tether froze $1.5 billion in USDT.

Circle froze another $800 million in USDC.

The hacker had reportedly deposited USDT into Aave as collateral.

He borrowed ETH towards that collateral and moved on.

Now comes the fascinating part.

Tether can freeze USDT, however it can't immediately freeze ETH borrowed from Aave.

So Aave might probably be left with frozen collateral and dangerous debt, while the hacker holds liquid ETH.

Primarily, the stablecoin issuers managed to freeze the collateral, however probably couldn't get well the belongings borrowed towards it.

My query is:

Is that this truly a loophole in DeFi lending protocols, or am I missing one thing?

Can Aave get well the borrowed ETH, or is the protocol pressured to absorb the loss?

Would love to listen to what individuals acquainted with DeFi assume.