cetushack

Cetus Protocol hacked for $220M; $162M frozen by Sui validators.
$6M bounty offered to recover $60M in stolen ETH and frozen funds. Hack exploited Cetus’s smart contract pricing oracle vulnerability. Sui’s validator freeze raises concerns over network decentralization.CETUS token drops 53%, SUI price falls 15% after exploit.
#CetusHack #SuiBlockchain #DeFiExploit #CryptoSecurity #Decentralization
On May 22, 2025, Cetus Protocol, a leading decentralized exchange on the Sui blockchain, suffered a $220 million exploit. Sui validators swiftly froze $162 million of the stolen assets, preventing further losses. The hack targeted vulnerabilities in Cetus’s smart contracts, draining liquidity pools and sparking debate about the Sui network’s decentralization.

Cetus paused its smart contracts immediately to limit damage. The attacker exploited a flaw in the Concentrated Liquidity Market Maker system, manipulating token prices with fake tokens. Approximately $60 million in stolen funds were bridged to Ethereum and converted to USDC, with two Ethereum wallets holding over $55 million in ETH.

Cetus offered a $6 million white hat bounty to the hacker. The deal allows the attacker to keep 2,324 ETH, worth $6 million, if they return the remaining funds. “Return the 20,920 ETH and frozen assets, and we’ll close the matter without legal action,” Cetus stated in a blockchain transaction message. Failure to comply could trigger legal and intelligence measures.

The Sui Foundation, alongside validators, blacklisted the attacker’s addresses. This rapid response recovered 73% of the stolen funds but raised concerns about centralized control. With only 114 validators, critics argue Sui’s ability to freeze funds undermines blockchain decentralization principles.

Swift Response Limits Damage

Sui validators acted within hours to block transactions from the hacker’s addresses. This froze $162 million in assets, protecting the ecosystem. Cetus collaborated with the Sui Foundation and cybersecurity firm Hacken to patch the vulnerability. Trading resumed after the fix.

The hack caused a 53% drop in CETUS token value and a 15% decline in SUI’s price to $3.65. Market volatility surged as confidence in Sui-based DeFi protocols wavered. The exploit exposed weaknesses in Cetus’s pricing oracle, which failed to detect the manipulation.

Cetus’s response mirrors a 2022 Solana project hack recovery strategy. Both projects, reportedly founded by Henry Du, used bounty offers to negotiate with hackers. The Solana case successfully recovered funds, raising hopes for a similar outcome. However, the hacker has not yet accepted Cetus’s offer.

Decentralization Debate Intensifies

The validator intervention sparked controversy. Freezing funds required coordinated action among Sui’s 114 validators, prompting criticism from the crypto community. Some argue this demonstrates centralized control, as validators can censor transactions. “Sui’s ability to freeze funds shows decentralization is just marketing,” one observer noted.

The Sui team explored an emergency whitelist function to bypass security checks, enabling the freeze. This move, while effective, fueled concerns about the network’s structure. With founders allegedly holding the majority of SUI’s supply, critics question the blockchain’s long-term decentralization.

Cetus continues working with law enforcement and cross-chain protocols to track the remaining $60 million. On-chain data shows the hacker’s wallet, identified as “0xe28b50,” holds 12.9 million SUI, valued at $54 million. Efforts to recover these funds are ongoing.

The incident marks the largest DeFi hack of 2025, surpassing previous breaches. It underscores persistent vulnerabilities in decentralized finance, particularly in smart contract design. Cetus’s swift action and validator coordination mitigated losses, but the event highlights the need for robust security measures.

Cetus reported that it will borrow money from the Sui Foundation to mitigate the damage while waiting for the community to vote on how to handle the $160 million that is frozen.
Cetus borrows money from Sui, striving to compensate 100% of the losses for users. Photo: CryptoSlate
In the early hours of May 28, 2025, the DeFi project that was attacked last week, Cetus Protocol, announced that it has prepared a compensation plan for affected users.

On May 22, 2025, the decentralized exchange Cetus Protocol, a key liquidity provider in the <cc-38/> network,
suffered a hacking attack, resulting in $223 million worth of assets being stolen. The attackers exploited a vulnerability in the business logic of the smart contract, leading to nearly complete depletion of the liquidity pools. Tokens of the Sui ecosystem, including SUI and <cc-7/>

The Sui Foundation has stepped in to support the decentralized exchange Cetus, which recently suffered a massive $223 million exploit. By issuing a secured loan, the foundation aims to help fully compensate affected users — but the success of the plan hinges on a crucial community vote.

🔹 Loan as a First Step Toward Compensation
In a statement released on May 27, the Sui Foundation announced it would provide a loan to cover part of the funds that were bridged out of the Sui network by the attacker before validators were able to freeze their wallets. Cetus plans to supplement the loan with its own reserves to fully reimburse users.
However, this effort depends on the outcome of an on-chain vote, where the community will decide whether to unlock the frozen assets.

🛠️ Cetus Apologizes and Appeals for Support
Cetus echoed this approach in its own statement, taking responsibility for the exploit, apologizing to users, and urging the Sui community to support the vote. “We are now in a position to cover the stolen assets — currently off-chain — if the community agrees to release the locked funds,” the team stated.

🧨 How the Attack Happened: Exploited Code and Flash Swaps
On May 22, Cetus was hit by a sophisticated attack that exploited a vulnerability in its concentrated liquidity market maker contracts. The attacker took advantage of unchecked mathematical operations within a third-party code library and manipulated prices through flash swaps.
This allowed them to perform fake liquidity deposits and repeatedly withdraw real tokens. While validators successfully froze $162 million on-chain, a substantial amount was transferred to the Ethereum network.

📉 Impact: CETUS Price Crash and TVL Drop
The exploit caused the CETUS token to plummet by 40%, and it remains down roughly 20% over the past week. Meanwhile, Sui’s total value locked (TVL) dropped from $2.13 billion to $1.77 billion, according to DefiLlama.

🧩 Sui Reinforces Security Commitment
Although the vulnerability originated in Cetus’s own code rather than the Sui network’s core infrastructure, the foundation acknowledged its responsibility in maintaining ecosystem security. Alongside the loan, Sui pledged an additional $10 million toward audits, bug bounties, and formal verification tools.
The foundation also plans to expand its bug bounty program to include high-value protocols like Cetus, which have TVLs exceeding $50 million, to incentivize white-hat hackers to discover flaws before they can be exploited.

⚖️ Decentralization vs. Security
While some community members praised the swift response and transparent recovery plan, others expressed concern that wallet freezing may undermine the core principles of blockchain decentralization.

⏳ What’s Next?
Cetus is expected to release a detailed recovery plan soon. The compensation process is set to begin regardless of the vote outcome — but full reimbursement depends on the community’s decision to unlock the remaining funds.

#cetushack , #sui , #CryptoSecurity , #decentralization , #CryptoNewss

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