Sui Blockchain Faces Backlash Over Cetus Protocol Recovery Plan

Coin WorldSaturday, May 24, 2025 9:47 am ET
1min read

The Sui blockchain is currently under intense scrutiny following its support for a controversial proposal by the DeFi platform Cetus Protocol. The proposal aims to recover $162 million in frozen assets, a move that has sparked significant debate within the crypto community.

On May 21, Cetus Protocol experienced a major security breach, resulting in the loss of over $223 million to a hacker. In response, more than a third of Sui validators froze a portion of the stolen assets by refusing to process transactions from two wallets believed to be linked to the attacker. This action was taken to prevent further loss and to facilitate the recovery of the remaining funds.

Cetus Protocol has proposed a protocol upgrade to return the frozen funds without altering the historical blockchain records or rolling back transactions. This approach is intended to be a compromise, but it has raised concerns about the integrity of Sui’s decentralization. Critics argue that freezing smart contracts and censoring transactions undermines the principle of blockchain immutability, which is a fundamental aspect of decentralized ecosystems.

The Sui Foundation has agreed to support an on-chain vote on the proposal but has stated that it will remain neutral and abstain from participating. The Foundation has also emphasized that Cetus must use all its available financial resources to compensate affected users until it repays all losses. This stance has been met with mixed reactions, with some community members praising the Foundation’s neutrality while others criticize it for not taking a stronger stance against the proposal.

The Sui Foundation’s decision to offer a $5 million reward for information leading to the hacker’s identification has also sparked controversy. On-chain investigator ZachXBT and Yu Xian, co-founder of blockchain security firm SlowMist, have both criticized the bounty as vague and unhelpful. They argue that such offers only pay upon success and fail to compensate the significant time and effort that investigators invest upfront. Xian further warned that unless a hacker willingly returns the funds or faces pressure to do so, investigators often end up in prolonged chases with little hope of resolution.

As the situation continues to unfold, the Sui blockchain’s handling of the Cetus crisis has raised significant questions about the principles of decentralization and the integrity of blockchain immutability. Stakeholders will closely monitor developments, especially regarding the proposed measures to recover funds, to ensure that a contentious precedent is not set in the crypto community. The outcome of the on-chain vote will likely play a pivotal role in shaping the future protocols surrounding asset recovery within decentralized ecosystems.