Cetus Loses $223 Million in Sui Blockchain Hack, Halts Smart Contract

On Thursday, May 22, Cetus, a liquidity provider on the Sui blockchain, confirmed a significant security breach resulting in a loss of $223 million. In response to the hack, Cetus immediately paused its smart contract to prevent further losses. By halting smart contract activity, the protocol was able to safeguard $162 million of the compromised assets. However, the remaining funds were being transferred across multiple Sui wallets, many of which have already been blacklisted.

Cetus is actively working with the Sui Foundation to contain the damage and recover as many funds as possible. The Sui Foundation reported that validators have taken steps to ignore transactions originating from wallets linked to the hack. This collaborative effort aims to protect the ecosystem by identifying and blacklisting addresses associated with the stolen funds until further notice.

The incident has sparked criticism on social media, with users raising concerns about centralization. Many argued that Cetus's ability to pause its smart contract indicates a lack of true decentralization, as no single party should have the authority to halt execution unilaterally in a decentralized finance protocol. Additionally, criticism was directed at the Sui Foundation for its role in censoring transactions linked to the attack. Some users questioned whether it was worse for a hacker to steal funds or for validators to freeze wallets.

Neither the Sui Foundation nor Cetus has directly addressed these concerns. The hack has had a notable impact on the market, with the Cetus Protocol token experiencing a significant drop. The Sui token also declined, reflecting the broader market reaction to the incident.