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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