In a pivotal development for the Sui blockchain ecosystem, the Sui Foundation has announced plans to hold an on-chain vote that could authorize the return of $162 million in frozen user funds.
These funds were initially locked by the Sui validator community in response to a massive exploit targeting Haedal, a liquid staking protocol built on Sui.
The breach, traced to a vulnerability in Haedal’s liquidity provider, Cetus, resulted in a staggering $223 million loss.
In an emergency maneuver, over one-third of validators, enough to enforce the action by stake, chose to freeze transactions from addresses suspected to be tied to the attack.
Thereby preventing further fund movement and potential cross-chain transfers by the attacker.
Validator Response Freezes Funds Without Reversing Chain History
The unique architecture of Sui’s validator system played a crucial role in the emergency freeze.
Each validator maintains a configuration file that can exclude transactions from specific addresses at their own discretion.
The decentralized safeguard was rapidly utilized as validators individually chose to block interactions from two wallet addresses connected to the exploit.
The proactive measure froze approximately $162 million of the stolen funds before the attacker could bridge them out of the network.
Importantly, this was achieved without a rollback of chain history or reversal of any transactions, a critical distinction that preserves the network’s integrity while still responding to emergent threats.
Also Read: Cetus Protocol Offers $6M Bounty To Hacker In Return Of $56.3M, After $223M Sui DEX Exploit
Cetus Pushes for Protocol Upgrade via Community Vote
As the attacker remains unresponsive to outreach efforts, Cetus has proposed a protocol-level upgrade to unlock and return the frozen funds to their original owners.
In a public appeal, Cetus stressed that such a decision must not be made unilaterally, calling for an inclusive on-chain vote involving validators and SUI stakers.
The Sui Foundation has expressed conditional support for this process, emphasizing its role as a neutral facilitator rather than a decision-maker.
They outlined two key conditions: first, that they will abstain from influencing the outcome.
Also secondly, that Cetus must commit to using its full financial resources to recover the remaining stolen funds and compensate affected users fully.
Security, Ethics, and Governance Intersect in Unprecedented Decision
This proposed vote represents a watershed moment in decentralized governance, blending urgent security needs with ethical considerations around user restitution and blockchain immutability.
The Sui Foundation, Cetus, Inca Digital, and international law enforcement are continuing their collaborative efforts to trace and reclaim the stolen funds.
Meanwhile, the community is being called upon to weigh the trade-offs between honoring decentralization principles and enacting extraordinary measures to protect users.
The outcome of this vote could set a significant precedent not just for Sui, but for governance models across all blockchain networks, as it may redefine how emergency fund recovery is approached in decentralized finance.
Also Read: Sui’s Leading DEX, Cetus Protocol, Suffers $260 Million Token Drain in Hack