Cetus' Strategic Response to Sui Network Security Breach

By: Eva Baxter

The Cetus Protocol, a Sui-based decentralized exchange, recently vowed to pay a $5 million reward to anyone who can provide information leading to the arrest of the attacker responsible for extracting $223 million from its exchange. This bold move comes after Cetus partnered with the cybersecurity firm Inca Digital and received backing from the Sui Foundation. Informants are instructed to email critical details regarding the perpetrator, emphasizing identity verification to claim the bounty. Furthermore, Cetus is willing to retract the bounty should the attacker choose to return the funds and comply with an earlier settlement proposal.

Preceding this initiative, Cetus had already proactively engaged in negotiations with the hacker via an on-chain transaction. The offer, amounting to $6 million as a retention fee or 2,324 ETH on the Ethereum blockchain, required the attacker to return a substantial portion of the stolen funds, valued at $55 million in ETH and other amounts frozen on the Sui network. The negotiation was designed to avert any further global law enforcement action against the exploiter. The data breach exploited a vulnerability in Cetus' pricing mechanism, leading to the transference of $61 million to Ethereum, while Sui network validators successfully froze the remaining $162 million.

This incident has sparked a debate over the centralization versus decentralization of blockchain networks, particularly given that Sui's validators collectively agreed to freeze assets tied to the attacker. While quick asset protection is noted, the capacity for validators to arbitrarily suspend accounts raises significant concerns about the independence and decentralization of blockchain networks. Sui Network's validator decisions have brought these issues to the forefront, challenging the traditional security assumptions associated with layer-1 blockchains.

Cetus' current recovery strategy mirrors a previously successful negotiation undertaken by its development team during a similar incident on Solana involving Crema Finance. In that instance, a compromised deal resulted in the recovery of the majority of funds, setting a precedent for Cetus' current approach. The exchange remains tight-lipped about when full operations will resume, focusing efforts on mitigating further risks and securing the network against potential future threats.