Stolen Funds will be Reimbursed by Cetus, Supported by Sui Foundation Following $223M Heist
The $223M Cetus Hack and the Community's Role in Recovery
The DeFi protocol Cetus, built upon the Sui network, is making a bold move to rectify the $223 million loss from their Concentrated Liquidity Market Maker (CLMM) pools, which occurred on May 22. Here's how the recovery plan unfolds, with a critical community vote forthcoming.
The Disaster and the Response
In a May 27 announcement on their platform, the Cetus team indicated that they'd secured enough assets from their treasury and a strategic loan from the Sui Foundation to ensure users are fully compensated. However, this recovery hinges on the results of an ongoing community vote aimed at unlocking frozen funds.
"We humbly ask for the Sui community's full support to recover the funds via the upcoming vote," the team emphasized. The decision lies with the community, as the on-chain vote will determine whether to unlock frozen wallets and initiate restitution.
The recovery plan has gather support, but the fate of the funds ultimately rests with the Sui community. This presents a significant test for decentralized crisis response—a departure from traditional finance, where institutions have the power to dictate recovery proceedings.
A Hack Exposed: The Details
The hack occurred at 10:30 UTC on May 22 when an attacker exploited a vulnerability in Cetus's CLMM pools. The flaw resulted in mishandled overflow checks during liquidity operations, allowing the hacker to manipulate pool prices, inject artificial liquidity, and drain funds across multiple transactions.
Despite the swift actions taken by Cetus in disabling vulnerable contracts and collaborating with Sui validators to freeze $162 million, the thief managed to bridge roughly $60 million worth of tokens to Ethereum and convert them into ETH, leaving a trail at addresses 0x0251536bfc and 0x89012a55cd.
Meanwhile, Cetus partnered with law enforcement agencies, the Sui Foundation, and security firm Inca Digital and even initiated white-hat negotiations with the attacker. However, the hacker did not respond, forcing the protocol to issue a $5 million bounty for information leading to the culprit's identification and arrest.
The Aftermath on Sui Assets
The hack triggered a panic across Sui-based tokens, causing heavy selloffs. For instance, LBTC and AXOL dropped to near zero, while LOFI and HIPPO lost over 80% of their value.
Through decentralized governance, the Sui community now holds the keys to resolving a nine-figure breach, demonstrating the power of community-driven recovery in the world of DeFi.
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The Cetus team is proposing a recovery plan that relies on the Sui community's decision to unlock frozen wallets and initiate restitution, using technology like blockchain and crypto wallets. The hacker, who exploited a vulnerability in Cetus's CLMM pools, not only drained funds within Sui but also bridged and converted a portion of the stolen tokens into Ethereum, leaving traces at specific Ethereum addresses.
