Cetus hack: Sui Foundation loans funds to cover $223M losses, aims for full user recovery, pending community vote on $162M frozen assets.
After hackers exploited a security vulnerability in the smart contract code of the Sui blockchain protocol, the Cetus breach resulted in a $223 million loss.
The Sui Foundation announced that it would provide a secured loan to Cetus in response to this breach, thereby allowing the protocol to compensate users whose stolen funds were impacted entirely. This loan is a component of a broader recovery strategy designed to mitigate losses that Cetus could not manage independently.
The Sui Foundation will assist in recovering from the Cetus hack
The loan from the Sui Foundation is intended to assist Cetus in reimbursing the misappropriated assets disconnected from the Sui blockchain. These loan proceeds will be combined with Cetus’s treasury funds to compensate for the complete loss resulting from the breach.
According to Cetus’s recent post on X, this loan is a critical step in enabling a 100% recovery for users affected by the Cetus hack, assuming that the locked funds can be recovered through a forthcoming community vote. The Sui Foundation’s loan is intended for assets bridged out of the Sui network and is distinct from the suspended funds held by validators.
The Foundation emphasized that this measure, in conjunction with the community vote, establishes a way to achieve entire user compensation. The Foundation affirmed its ongoing support for members impacted by the Cetus hack incident, stating, “These are extraordinary measures taken to protect the Sui community.”
The Effect of the Cetus Hack on the Sui Ecosystem
The Cetus breach resulted from a concealed error in a piece of open-source code that Cetus employed in its smart contracts. The platform’s security was compromised by this vulnerability, which enabled hackers to plunder $223 million. Following the compromise, the Cetus and Sui network validators promptly prohibited additional unauthorized transactions by preventing those signed by the attacker’s address.
Despite these endeavors, the Cetus hackers were able to convert approximately $60 million into alternative assets and extricate them from the blockchain, thereby complicating the process of full recovery. Cetus responded by offering a $6 million reward for information that leads to the recovery of misappropriated funds.
Nevertheless, the Cetus token (CETUS) price experienced a 16.69% increase, reaching $0.1518, following the Sui Foundation’s loan and recovery plan announcement. The SUI token, which was trading at $3.67 at the time of publication, also experienced a 5.45% increase.
Community Response and Recovery Initiatives
The crypto community has responded to the Cetus breach with various emotions. A few users commended Cetus for their prompt response and efforts to resolve the issue. Others criticized the firm for its inadequate compensation and communication measures.
The freezing of funds by Sui validators also ignited a debate regarding decentralization, as some community members perceived this as a centralized action that violated blockchain principles.
Cetus acknowledged the error in their code and expressed remorse for its effect on the broader ecosystem and consumers. The company emphasized its dedication to security enhancements and pledged to conduct more rigorous inspections and surveillance. In a recent statement, Cetus stated,
“Your trust is our top priority, and we are fully committed to making things right.”
Subsequent Procedures for the Complete Recovery of the Cetus Hack
The recovery plan’s success is contingent upon the results of the forthcoming community referendum, which will determine the fate of the frozen assets.
Cetus encouraged the Sui community to endorse the vote to facilitate the full compensation of the impacted users. They confirmed that recovery efforts will commence immediately, irrespective of the voting outcome, and that detailed plans will be provided.