Did This Binance Hacker Just Outsmart Tether and Circle?

This is likely one of the craziest DeFi moves I've come across.

Here's what allegedly occurred:

Tether froze $1.5 billion in USDT.

Circle froze one other $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 half.

Tether can freeze USDT, however it can't instantly 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 recuperate the belongings borrowed towards it.

My question is:

Is that this truly a loophole in DeFi lending protocols, or am I lacking something?

Can Aave recuperate the borrowed ETH, or is the protocol pressured to soak up the loss?

Would love to hear what individuals accustomed to DeFi assume.