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Sui validators freeze stolen funds

Sui validators freeze stolen funds: Decentralization under scrutiny after Cetus DEX hack

https://icn.live/wp-content/uploads/2025/05/sui-funds.mp3
  • by ICN.live
Fatima Al-Nouri

Sui validators freeze stolen funds in the aftermath of the massive Cetus DEX hack on May 22.

Over $220 million was drained from Cetus, a decentralized exchange on the Sui blockchain. The breach exploited smart contract vulnerabilities. Within hours, Sui validators took action by identifying suspicious addresses and freezing $162 million of the stolen assets.

The decision to freeze funds raised serious questions. While it helped victims, it also triggered concerns about censorship resistance. Sui validators, numbering just 114, collectively ignored transactions from specific wallet addresses. This power shows the network’s ability to respond quickly, but also challenges its claim of being decentralized.

The Cetus team is collaborating with the Sui Foundation and Web3 security groups. Their goal is to trace and recover the remaining $58 million. Extractor, a Web3 security tool, reported that $63 million had already been bridged to Ethereum. Threat actors laundered $53 million worth of Ether through wallets tied to the hack.

Centralized Power in Decentralized Systems?

Freezing wallets helped victims, but many now ask—how decentralized is Sui really?

The crypto community is divided. Some praise the swift coordination across the Sui ecosystem. Others argue that if validators can freeze any wallet, decentralization becomes a myth. As one user put it, “Sui is anything but decentralized.”

This incident is part of a broader trend. 2025 has seen multiple hacks targeting Web3 platforms. Industry leaders are warning that unless crypto projects establish robust self-regulation and security frameworks, external regulation will increase.

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Sui validators freeze stolen funds but spark decentralization debate

The hack also raises bigger questions about smart contract audits. Web3 developers face increasing pressure to verify their code against potential exploits. Platforms that can’t guarantee safety risk losing trust.

As the investigation continues, many in the crypto world are watching closely. The next steps by Cetus and Sui Foundation could set a precedent. If the frozen assets are returned and the vulnerabilities are patched, it may serve as a success story amid chaos.

But the debate lingers. Can a blockchain truly be decentralized if validators can selectively ignore transactions?

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What exactly happened in the Cetus DEX hack?

On May 22, 2025, Cetus, a decentralized exchange on the Sui blockchain, was hacked. The attackers exploited a vulnerability in the smart contract code, draining approximately $223 million in user funds. Security teams and Web3 tools like Extractor quickly identified part of the stolen assets being laundered via Ethereum. In response, Sui validators froze $162 million in suspicious wallets, marking a significant intervention effort within the network.

How did Sui validators freeze stolen funds?

Validators on the Sui blockchain identified wallet addresses associated with the stolen funds. They collectively agreed to ignore transactions from these addresses, effectively freezing $162 million worth of assets. While this action was praised for stopping further theft, it also sparked criticism about centralization and censorship resistance in blockchain networks. The situation raises tough questions about the balance between security and decentralization.

Is the Sui blockchain still considered decentralized?

That’s now a hot debate. Technically, Sui operates as a decentralized network. However, the fact that just 114 validators could freeze wallet addresses and block transactions has raised serious concerns. Critics argue that this kind of authority undermines the fundamental principles of decentralization. Others believe that in cases like this, limited intervention is justified to protect users and maintain ecosystem trust.

What does this mean for the future of crypto security?

The Cetus hack underscores the urgent need for stronger security practices in crypto and Web3. More rigorous smart contract audits, collaborative incident responses, and perhaps even new governance models will be necessary. This event also shows that the crypto space must balance decentralization with practical risk management. If not, governments may impose stricter regulations to protect users, shifting the control away from the community.

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