Affected Cetus Users May Receive 100% Compensation as Vote Progresses

Cetus, one of the largest decentralized exchanges on Sui, recently suffered a $200 million exploit. The incident led to a sharp decline of up to 90% in the price of several tokens on the platform.

The Cetus team has proposed a community vote to unlock $162 million in frozen funds and secure an emergency loan from the Sui Foundation. If approved, the move would enable full reimbursement of user losses. Meanwhile, preparations for compensation are already underway.

Cetus Exploit: What Happened

The attack exploited a vulnerability in the Concentrated Liquidity Market Maker (CLMM) smart contract, which was based on open-source code. The hacker identified a flaw that allowed them to manipulate pool liquidity and withdraw funds without providing an equivalent deposit.

During the incident, $162 million in onchain assets were frozen, while the remaining funds were moved through multiple cross-chain bridges. After identifying the vulnerability, the Cetus team halted key pools and immediately deployed a patch to fix the contract.

More on the topic: $162M Frozen After Cetus Hack: Inside the Exploit and the Community Fallout

Reimbursement and Voting Mechanism

With a combination of internal reserves and an emergency loan from the Sui Foundation, Cetus can fully cover user losses, provided the community votes to unlock the frozen funds.

Voting began on May 27 and will run through June 3. As of writing, over 55% of validators have expressed support, while around 44% have yet to vote. Approval requires participation from validators representing more than 50% of the total staked share, along with a majority of votes in favor.

If approved, the frozen assets will be transferred to a multisig wallet controlled by Cetus, auditing firm OtterSec, and the Sui Foundation. The team has committed to releasing a detailed reimbursement plan next week.

Related: Hacken CEO Calls Out Crypto Sector’s Security Complacency

Debate Over Centralization and Security

The ability of validators to freeze assets has sparked debate. Some in the community view it as a centralization risk, while others welcome the swift response as a positive sign for network security.

In a statement, the Sui Foundation emphasized that these are emergency measures to protect the Sui community. However, it also noted that full reimbursement is only possible with user support.

Sui participants can delegate their stake to a validator that reflects their position. To maintain neutrality, the Foundation’s own stake has been excluded from the vote count.