Sui Blockchain Faces Scrutiny Over Support for Cetus Protocol’s Controversial Asset Recovery Proposal

• The Sui blockchain is facing criticism after supporting a proposal from Cetus Protocol to recover $162 million in frozen assets.

• While Cetus seeks to retrieve the funds without altering blockchain history, critics argue the move compromises Sui’s immutability.

• On-chain investigator ZachXBT also condemned the bounty offers from Cetus and the Sui Foundation as vague and ineffective.

The Sui blockchain is under growing scrutiny after backing a controversial proposal from DeFi platform Cetus Protocol to recover $162 million in frozen assets.

This decision follows a May 21 incident in which Cetus lost over $223 million to a hacker. In response, more than a third of Sui validators froze a portion of the stolen assets by refusing to process transactions from two wallets believed to be tied to the attacker.

Sui’s Support for Cetus Plan Raises Questions on Decentralization

Cetus offered the hacker a $6 million bounty to recover the remaining funds. However, the offer has drawn sharp criticism from community members who argue it is too low.

At the same time, Cetus is pushing for a protocol upgrade to return the frozen funds. The proposal aims to achieve this without altering historical blockchain records or rolling back transactions.

While this approach is framed as a compromise, it has triggered debates over the integrity of Sui’s decentralization.

Meanwhile, the Sui Foundation has agreed to support an on-chain vote but stated it will remain neutral and abstain from participating.

“Earlier today, Cetus called for a community vote on a protocol upgrade to return the frozen funds, without rolling back chain history or reversing transactions. This is an extraordinary request in response to extraordinary need–Cetus’s customer funds are at stake. After consideration, we support their call for an on-chain vote,” Sui stated.

The Foundation also stated that Cetus must use all its available financial resources to compensate affected users until it repays all losses.

Critics warn that freezing smart contracts can be problematic even without reversing the chain. They argue that censoring transactions may also undermine the principle of blockchain immutability.

Sui’s Bounty Offer Draws Outrage

Meanwhile, the Sui Foundation’s decision to offer a $5 million reward has sparked further controversy. The bounty targets anyone who can provide information leading to the hacker’s identification.

On-chain investigator ZachXBT called the bounty “vague” and unhelpful. He argued that such offers only pay upon success and fail to compensate the significant time and effort that investigators invest upfront.

Yu Xian, co-founder of blockchain security firm SlowMist, also criticized the offer. He warned that unless a hacker willingly returns the funds or faces pressure to do so, investigators often end up in prolonged chases with little hope of resolution.

“The investment cost of tracking services is very uncertain, such as threat intelligence cooperation network resource coordination, stolen user communication, law enforcement communication, investigation and evidence collection, evidence fixation, negotiation promotion, analysis reports, etc. If there is no upfront cost or deep enough cooperation resources to guarantee, it is difficult to continue to advance,” Xian added.

Conclusion

As the situation unfolds, the Sui blockchain’s handling of the Cetus crisis has sparked significant debate over the principles of decentralization and the integrity of blockchain immutability. Stakeholders will closely monitor developments, especially regarding the proposed measures to recover funds so as not to set a contentious precedent in the crypto community. The outcome of the on-chain vote will likely play a pivotal role in shaping the future protocols surrounding asset recovery within decentralized ecosystems.