The Sui Foundation has stepped in to support Cetus Protocol, the largest decentralized exchange (DEX) on the Sui blockchain, by extending a loan that will enable full reimbursement to users affected by a $223 million exploit last week. The repayment of this loan depends on the outcome of an upcoming on-chain community vote.
The loan specifically covers bridged assets lost during the hack and is separate from the frozen funds currently locked on-chain, which are also subject to a governance vote for potential use in compensation.
Cetus confirmed on X (formerly Twitter) that the combination of their cash and token reserves, alongside the crucial loan from the Sui Foundation, puts them in a position to fully cover all stolen assets that are off-chain, provided the locked funds are approved for release by the community.
“This critical loan makes 100% recovery for all affected users achievable,” Cetus said, emphasizing the importance of the forthcoming community decision.
The recovery plan depends heavily on a pending governance proposal that seeks community approval to unlock frozen funds to complete reimbursements.
“These extraordinary measures demonstrate our commitment to protecting the Sui community,” the Sui Foundation said in a statement, adding that “full recovery is within reach” if the community backs the proposal.
The exploit involved an attacker abusing manipulated spoof tokens like BULLA to exploit weaknesses in Cetus’s price curves and liquidity reserve mechanisms. This allowed the attacker to drain real assets including SUI and USDC from liquidity pools without providing equivalent collateral.
At the time of the hack, more than $162 million worth of stolen tokens were frozen on-chain, while the remaining assets were bridged out through various channels. The attacker’s wallet remains active and was last tracked holding over 12.9 million SUI, with additional assets suspected to be swapped or hidden across different networks.
In response, Cetus paused all smart contract activity and launched an investigation. The incident caused the CETUS governance token to drop nearly 40%, and trading volumes across the Sui DeFi ecosystem declined amid concerns over liquidity and protocol security.
With the Sui Foundation’s loan secured, Cetus now states it is ready to begin immediate reimbursements to affected users, marking a critical step in restoring confidence in the platform.
