Stolen Funds to be Recovered and Users Compensated Completely Following $223M Heist, With Sui Foundation's Support
Cetus Protocol, a decentralized exchange operating on the Sui network, has pledged to fully reimburse users affected by a $223 million exploit that took place on May 22 and targeted the platform's Concentrated Liquidity Market Maker (CLMM) pools. This recompense hinges on an upcoming community vote and a crucial loan from the Sui Foundation to recover frozen assets worth $162 million.
In a May 27 announcement posted on their platform, the Cetus team disclosed that they have amassed sufficient assets from their treasury, together with a strategic loan from the Sui Foundation, to ensure that impacted users receive full compensation, contingent on the outcome of the ongoing community vote to unlock the frozen funds. They have appealed to the Sui community for support in this critical endeavor.
The recovery plan has received broad backing from various quarters, yet the final decision lies in the hands of the Sui community, who are set to cast their votes in an on-chain poll that may unlock the frozen wallets and set the restitution process in motion. This vote presents a significant test for crisis management in the decentralized world, demonstrating the shift in power from traditional financial institutions to Sui validators and stakers who now determine the resolution of such monumental breaches.
Changpeng Zhao, Binance founder, has expressed appreciation for the process, while the Cetus team acknowledges the extraordinary nature of their request but maintains it is the appropriate action to redress the losses incurred by the attack. Moreover, partial compensation will commence should the vote fail to pass.
In the initial stages of the breach on May 22, an attacker took advantage of a vulnerability in the protocol's CLMM pools by mismanaging overflow checks during liquidity operations. This enabled the hacker to manipulate pool prices, introduce artificial liquidity, and divert funds through multiple transactions. Within an hour of the attack, Cetus had disabled vulnerable contracts and partnered with Sui validators to freeze two wallets containing $162 million. Regrettably, the thief managed to transfer approximately $60 million worth of tokens to Ethereum and convert them into Ether, leaving traceable evidence at addresses 0x0251536bfc and 0x89012a55cd.
In an attempt to regain the lost funds, Cetus has collaborated with law enforcement agencies, the Sui Foundation, and security firm Inca Digital. Simultaneously, white-hat negotiations with the attacker have been initiated, albeit to no avail. Consequently, Cetus recently announced a $5 million bounty for information leading to the identification and apprehension of the perpetrator.
The hack sparked panic among Sui-based tokens, with assets like LBTC and AXOL plummeting to distressingly low levels, while others, including LOFI and HIPPO, sustained losses exceeding 80% of their value, according to DEX Screener data.
[1] Cetus Protocol Hack – All the details https://dex-sceener.com/token/SUI[2] Cetus Management Updates https://app.cetus.fi/news[3] Breach Analysis – Cetus Protocol https://decrypt.co/69784/cetus-protocol-223-million- crypto-exploit-linked-liquidity-pool-bug[5] Cetus Attack Highlights Weaknesses in DeFi Ecosystem https://decrypt.co/69778/cetus-attack-highlights-decentralized-finance-exploits-liquidity-pools
- The industry is closely watching the Cetus Protocol's decision to fully reimburse users impacted by a massive crypto exploit, as it hinges on a community vote and a crucial loan from the Sui Foundation to recover frozen assets worth $162 million, showcasing a significant shift in power in the decentralized world.
- Binance founder Changpeng Zhao has expressed appreciation for the process, as the Cetus team, in an attempt to regain the lost funds, collaborates with law enforcement agencies, the Sui Foundation, and security firm Inca Digital, and has announced a $5 million bounty for information leading to the identification and apprehension of the perpetrator.
- In the aftermath of the hack, various Sui-based tokens, such as LBTC and AXOL, plummeted to distressingly low levels, while others, including LOFI and HIPPO, sustained losses exceeding 80% of their value, according to DEX Screener data, underscoring the vulnerability of the decentralized finance (DeFi) ecosystem.
- Amidst the general-news and crime-and-justice sectors, the crypto community follows closely the recovery plan and the outcome of the community vote, which presents a significant test for crisis management in the decentralized world, and might set new precedents for decision-making in the industry.
