Cetus Protocol Hack Sparks Debate on Sui Network’s True Decentralization and Security Measures

• The recent $260 million hack of Cetus Protocol has raised critical questions about the Sui network’s decentralization, igniting a debate within the blockchain community.

• Critics argue that the immediate freezing of contracts highlights growing centralization in the supposed decentralized systems.

• As Jesus Martinez, founder of Legion, pointed out, the incident serves as evidence of the Sui network’s lack of true decentralization.

Explore how the $260 million Cetus Protocol hack challenges the Sui Network’s decentralization, reigniting a crucial debate in the crypto community.

Is the Sui Network Truly Decentralized?

The stunning hack of Cetus Protocol on May 22, 2025, forced the platform to **pause its smart contracts** immediately to mitigate further losses. The project’s announcement aimed to **recover stolen funds** through a whitehat agreement.

However, experts have contested this preventative measure as contradictory to the ideals of decentralization that blockchain technology professes. **Jesus Martinez**, founder of Legion, emphatically stated that this event underscores the **centralized nature** of the Sui network.

“Decentralization is a lie. They’re blocking transactions for the $200 million ‘hack’ that happened on SUI. The mask is now off,” Martinez asserted, a statement that resonated widely within the community.

Similarly, **Duo Nine**, founder of YCC, expressed that while Cetus and Sui’s actions might be defensible, it reveals that **decentralization** often serves merely as a marketing term for most projects beyond 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 remarked, reflecting growing skepticism.

Concerns about Sui’s centralization are not new. **Justin Bons**, founder and CIO of CyberCapital, publicly accused Sui of maintaining high levels of control, stating that the founders hold **84% of staked tokens**. He argued that such concentration undermines the principles of decentralization.

Despite Sui’s claims that its founders do not manage the treasury or the tokens allocated to investors, skepticism has only intensified following the recent hack. Bons noted, “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?” This represents a significant sentiment among blockchain users who are increasingly intolerant of centralized control.

Endless Debate: Control vs. Permissionless Systems

The Cetus incident isn’t isolated; it’s part of a broader narrative in cryptocurrency. Similar controversies arose from the 2016 **DAO hack** on Ethereum, which resulted in a hard fork, thereby giving birth to Ethereum Classic. **Solana** had to reach a consensus among validators to address an unlimited token issuance bug. Moreover, Bitcoin faced its own crisis when a critical inflation bug prompted Bitcoin Core developers to communicate discreetly with mining pools to resolve the issue.

More recently, **Tether** came under fire for freezing billions to assist law enforcement, illustrating that even leading projects grapple with balancing security and decentralization.

Investor **Cassie.sui** expressed disillusionment, stating, “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.”

In a climate where projects like **THORChain** face criticism for either intervention or inaction, the crypto community remains sharply divided. One side argues, “If they can freeze funds, is it really decentralized?” while the other contends, “They saved $162 million from being stolen permanently.” The discourse is underpinned by valid arguments, highlighting the challenging dynamic between security and decentralization.

As **Gautham**, co-founder of Polynomial, noted, “This changes everything about L1 security assumptions.” The pivotal question remains whether projects like Sui can sustain a **balance between security and decentralization**, or if we’re witnessing the decline of decentralization’s fundamental ideals.

While the future remains uncertain, one takeaway is clear: the recent events have severely shaken trust in decentralization within the crypto space.

Conclusion

The aftermath of the Cetus hack and ensuing debates about the Sui network’s structure vividly illustrate the ongoing tension between **control and permissionless paradigms** in blockchain. As the industry grapples with these realities, it raises pivotal questions about the evolution of decentralization amid security challenges.