Cetus Protocol Hack Raises Concerns Over Sui Network’s Decentralization and Security Balance

• Cetus Protocol was hacked for $260 million, prompting criticism of Sui Network’s decentralization after contracts were paused.

• Key figures allege centralization, citing validator collusion and high token control by Sui founders as major red flags.

• The incident reignites a wider crypto debate: can security interventions coexist with true decentralization?

On May 22, 2025, a dramatic incident revealed vulnerabilities in decentralized finance as Cetus Protocol lost $260 million, shaking trust in blockchain networks.

Is the Sui Network Truly Decentralized?

Immediately after the hack, Cetus quickly paused its smart contracts to prevent further losses. In its latest announcement, the project stated that it had offered a whitehat agreement to the hacker to recover the stolen funds.

Although the intent behind pausing the contracts may have been good, many experts argue that this action contradicts the spirit of decentralization, the foundational value of blockchain. Jesus Martinez, founder of Legion, claimed this was clear evidence that Sui is not truly decentralized.

“Decentralization is a lie. They’re blocking transactions for the $200 million ‘hack’ that happened on SUI. The mask is now off,” Jesus Martinez said.

His statement quickly caught the attention of the community, sparking widespread agreement. Duo Nine, founder of YCC, acknowledged that Cetus and SUI may have made the right decision. However, he argued that decentralization is merely a marketing term for most projects, except for Bitcoin and Ethereum.

“While this is good in this case, this shows SUI network can freeze your funds on demand. Decentralization is just marketing outside of BTC/ETH,” Duo Nine said.

Additionally, doubts about Sui’s decentralization aren’t new. In May 2024, Justin Bons, founder and CIO of CyberCapital, publicly accused Sui of centralization. He claimed that the founders controlled 84% of staked tokens, suggesting that if a small group controls the majority of tokens, they could manipulate the system at will, thereby undermining decentralization.

Although the Sui Network responded, insisting that its founders did not control the treasury or the tokens allocated to investors, these doubts persisted. After the Cetus hack, concerns resurfaced with renewed intensity.

“SUI’s validators are colluding to CENSOR the hacker’s TXs right now! Does that make SUI centralized? The short answer is YES; what matters more is why? The ‘founders’ own the majority of supply & there are only 114 validators,” Justin Bons added.

These sharp reactions show blockchain users’ sensitivity to any sign of centralized control.

Endless Debate: Control vs. Permissionless Systems

Cetus isn’t the first case to trigger such controversy. In fact, the 2016 DAO hack on Ethereum also prompted a hard fork, which ultimately led to the creation of Ethereum Classic. Similarly, Solana had to seek a silent consensus from validators to address an unlimited token issuance bug.

The Bitcoin network also encountered a critical inflation bug, necessitating discreet communication between Bitcoin Core developers and mining pools to patch the vulnerability before disclosing it to the public. Moreover, Tether has frozen billions of dollars in supporting law enforcement efforts.

More recently, THORChain faced criticism for being used by criminals to launder stolen funds from Bybit and Coinbase.

“Crypto is a lie. We were promised pure decentralization, unstoppable code, and trustless systems. Turns out… most major chains have hit the brakes when things went south,” investor Cassie.sui expressed.

If a project like THORChain chooses not to intervene, it risks legal and ethical scrutiny. If it decides to step in and avoid damage, it’s accused of centralization. Both sides indeed present compelling arguments.

“The crypto world is split. ‘If they can freeze funds, is it really decentralized?’ vs. ‘They saved $162 million from being stolen permanently.’ Both sides have valid points. But here’s what matters: This changes everything about L1 security assumptions,” Gautham, co-founder of Polynomial, commented.

Decentralization, once the core ideal, faces rigorous testing due to the harsh realities of security threats. Can projects like Sui strike a balance between security and decentralization? Or are we witnessing the decline of the ideal of decentralization?

The question of decentralization remains unanswered. However, one thing is clear: this event has deeply shaken trust in decentralization.

Conclusion

In light of the recent events surrounding the Cetus hack, the debate over the true essence of decentralization has been reignited. Whether or not Sui can uphold its decentralized principles while ensuring security remains to be seen. Industry leaders and users alike must grapple with the implications of these developments as the landscape evolves.