$223M Sui-based Cetus exploit reminds of DeFi centralization

Another hundreds-of-millions-worth USD crypto exploit reminds the whole decentralized finance (DeFi) industry that it's more centralized than their marketing teams claim.

DeFi protocol Cetus (CETU), which is one of the key players in the Sui (SUI) blockchain ecosystem, confirmed it had been exploited to the tune of $223 million yesterday.

However, the actions taken to mitigate the losses showcased that this protocol is not truly permissionless as DeFi projects claim to be, as they managed to "successfully pause" $162 million of the compromised funds.

"We are working with the Sui Foundation and other ecosystem members right now on next-step solutions, with the goal of recovering the remaining stolen funds," the team said.

Meanwhile, the Sui Foundation has also said that "a large number of validators" of the Sui network identified the addresses with the stolen funds and are, for now, ignoring transactions on those addresses, meaning that they can't be processed and the funds are stuck.

Crypto influencer @DU09BTC reacted to these actions by saying that "while this is good in this case, this shows SUI network can freeze your funds on demand."

According to him, "decentralization is just marketing outside of [Bitcoin and Ethereum]." However, Ethereum (ETH) is also known for invalidating transactions related to the infamous DAO hack in 2016.

Other commentators were also surprised that "you can just pause" transactions, while saying that "these chains aren't real" and "welcome to decentralization."

"Well, with what happened just imagine what if they could not pause nor do anything to manage what happened. Looks like that 'pause' feature is a blessing in disguise?" said @xspotcrypto.

In either case, the official cause of the Cetus exploit hasn't been announced yet.

Blockchain analysis company Elliptic estimates that the attacker might have exploited a possible vulnerability in the smart contracts regulating the liquidity pools.

"As often occurs, vulnerabilities in decentralized exchanges (DEXs) and automated market makers are exploited to drain their liquidity pools or to manipulate prices," the researchers said.