Sui Faces Decentralization Debate Amid Backlash Over $162M Cetus Recovery Proposal

The Sui blockchain ecosystem is facing intense community criticism after supporting a contentious $162 million recovery plan proposed by DeFi platform Cetus Protocol. The plan aims to return frozen funds following a significant security breach, but its implications for decentralization have sparked deep concern among blockchain advocates.

On May 21, Cetus Protocol suffered a devastating exploit that resulted in over $223 million in losses. In the immediate aftermath, more than one-third of Sui’s validators intervened, freezing a portion of the assets believed to be under the hacker’s control by refusing to process transactions from two linked wallets.

To recover the stolen funds, Cetus offered the attacker a $6 million bounty—an amount many in the community view as insufficient. The protocol also proposed a controversial on-chain upgrade to unfreeze the assets, without modifying blockchain history or reversing past transactions.

The proposal, though presented as a balanced solution, has stirred debate over core blockchain principles, particularly the sanctity of decentralization and immutability. Critics argue that freezing or censoring transactions—even without full rollbacks—compromises the credibility and neutrality of the chain.

The Sui Foundation responded by supporting the call for an on-chain community vote but pledged to remain neutral in the process. “This is an extraordinary request in response to extraordinary need,” the Foundation noted, emphasizing that Cetus customer funds are at risk and must be protected.

However, the Foundation added that Cetus is expected to deploy all available financial resources to compensate affected users until full repayment is achieved.

Another layer of controversy emerged when the Sui Foundation issued a $5 million bounty for information leading to the hacker’s identification. While intended to encourage accountability, the reward has been called vague and ineffective by prominent security analysts.

On-chain investigator ZachXBT dismissed the bounty as offering little practical support, highlighting the often-uncompensated effort investigators must undertake. Similarly, SlowMist co-founder Yu Xian expressed doubts about the viability of such rewards, noting that investigations require considerable upfront investment and resource coordination, often with no guarantee of success.

“Unless the attacker is pressured or voluntarily returns the funds, the process becomes a long, uncertain pursuit,” Xian cautioned.