Cetus, Sui Criticized For Centralization After Stolen Funds Frozen

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Cetus and the Sui Foundation are facing criticism after validators froze a large portion of the $223 million that was stolen during the Cetus hack on May 22, raising centralization concerns.

Cetus and the Sui Foundation announced that validators had frozen a majority of the stolen assets. According to the Cetus team, $163 million of the $223 million was frozen by validators and ecosystem partners on the same day as the incident.

However, the move to freeze the funds was criticized, with several Web3 community members saying it “undermines the principles of decentralization.”

“Sui validators are actively censoring transactions across the blockchain,” wrote one user on X, echoing similar posts by community members.

SUI validators are actively censoring transactions across the blockchain.
This completely undermines the principles of decentralization and transforms the network into nothing more than a centralized, permissioned database.

— Dave (@ItsDave_ADA) May 22, 2025

Another user by the name of Steve Bowyer also said that “many Web projects backed by VCs” seem to “lean heavily on centralization, despite borrowing Bitcoin’s ethos.”

Security Firm Pinpoints Main Cause Of The Cetus Hack

Blockchain security company Dedaub pinpointed the root cause of the Cetus hack that saw the decentralized exchange platform drained of $223 million within a 24-hour period.

According to the security firm’s May 23 report, the hackers exploited a flaw in the most significant bits (MSB) check.

That “allowed them to add massive liquidity positions with just one unit of token input, subsequently draining pools collectively containing hundreds of millions of dollars worth of tokens,” the firm wrote in their report.

SUI Price Struggles Continue

Since the Cetus hack, SUI’s market capitalization has dropped from $13.907 billion prior to the incident to around $11.67 billion on May 25, according to CoinMarketCap data. This was after the crypto’s price also dropped over 2% in the last week and recorded another minor loss in the past 24 hours.

SUI’s market cap has since recovered to around $12.09 billion. However, the project was recently overtaken by Hyperliquid (HYPE). As such, HYPE is now the 11th largest crypto by market cap with its valuation of around $12.85 billion.

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