Cetus Protocol Hack Leads to $260 Million Loss, SUI Price Drops 15%

Cetus Protocol, a leading decentralized exchange and liquidity hub on the Sui blockchain, has been the target of a significant security breach, resulting in losses estimated between $223 million and $260 million. The exploit triggered a sharp 15% drop in the price of SUI, the native token of the Sui blockchain, to $3.90, causing widespread concern within the ecosystem. The Cetus team is currently investigating the incident and has promised to release a further statement soon.

The hack was traced to a wallet identified as “0xe28b50,” which is believed to be controlled by the attacker. This wallet holds over 12.9 million SUI tokens, valued at approximately $54 million. The hacker has been converting the stolen funds into USDC and cross-chaining them to Ethereum to exchange for ETH, with around $60 million in USDC already cross-chained.

Initial investigations suggest that the attacker exploited the Cetus Protocol by deploying counterfeit tokens, such as BULLA, to manipulate pricing mechanisms and reserve metrics within the platform. The attacker added minimal liquidity to manipulate liquidity pools, allowing them to siphon off real assets like SUI and USDC. In response, the Cetus team has halted the affected smart contract to prevent further losses.

The breach has had a ripple effect on the Sui ecosystem. The liquid staking platform Haedal, which depends on the compromised Cetus liquidity pools, has suspended its haeVault feature. Haedal emphasized that user safety remains their top priority and that haeVault will resume once all risks are resolved and the environment is secure. Several Sui-based tokens tied to Cetus Protocol, including LBTC and AXOL, faced extreme losses, with assets like LOFI, HIPPO, and SQUIRT seeing steep declines of around 80% within just six hours.

Amid the turmoil, Cetus successfully froze around $162 million in affected assets. The protocol is also actively working with the Sui Foundation and key ecosystem partners to trace and recover the remaining stolen funds. Despite the sharp declines seen across Sui-linked tokens, the broader outlook for the network remains optimistic. While SUI trades well below its January peak, the protocol has achieved a major on-chain feat as its Total Value Locked (TVL) has reached a historic $2.2 billion as of the 22nd of May. This 222% year-over-year growth signals a resilient DeFi ecosystem and continued investor confidence, suggesting that Sui’s foundational strength may weather the current volatility.