Sui Token Tumbles as Crypto Community Grills Team Over ’Frozen’ Funds—Decentralization in Question

Sui’s token takes a hit after backlash over wallet freezes—turns out ’decentralized’ doesn’t always mean ’unstoppable.’

Subheader: When ’Code Is Law’ Meets the Fine Print

Investors are realizing the hard way that even shiny new Layer 1s come with escape hatches for the team. The irony? This happened the same week a16z published another manifesto about ’trustless systems.’

Subheader: The CEX Listings Paradox

Funny how these ’decentralization crises’ always seem to coincide with exchange liquidity drying up. A tale as old as time—or at least as old as the last bull market.

Sui community reacts to a planned network upgrade

So far, most of the reactions to the possible upgrade have been negative, with many users concerned such an upgrade could make the network lose trust as a decentralized protocol. Others added that rolling back or upgrading the network to recover the loss would be wrong.

They claimed that Cetus was well aware of the flaws in its smart contracts since last year, when they were exploited at a smaller scale with memecoins but failed to act. Thus, the protocol should cover the losses itself.

The sui chain should not be rolled back.. or upgraded.. to recover the loss…. This was a issue with a smart contract with the cetus application.. it was also known for months that there was some potential bugs since some where exploited at a small scale last year.. with meme…

— DrTrade 🇸🇻 (@DrTradeAU) May 24, 2025

Meanwhile, some users think the voting itself might be a charade. They noted that only 3.2% of SUI supply went to the public while half went to venture capital firms and insiders who have been staking all their tokens. Thus, they believe that these VC firms will determine the outcome of the vote, and individual stakers will not influence the final decision.

Interestingly, some users have criticized validators’ efforts to freeze funds, saying it amounts to censorship and defeats true decentralization. However, the team clarified that any validator on any network can decide to ignore transactions, and if enough of them do it, the transaction fails.

Despite the overwhelming opposition, several people still believe it is the best decision as it will ensure that Cetus users get their funds back. One user even recommended that founders and stakeholders with liquidity pools on Cetus decide, since they have a stake in the outcome.

SUI is down 5% in 24 hours

While debates continue over whether Sui should have the network upgrade, the network native token SUI is down 6.57% to $3.63 in the last 24 hours. Its decline is due to broader market struggles with price corrections after BTC set a new peak price of around $112,000.

However, the Cetus hack also contributed to the SUI drop, with the token dropping more than 13% from $4.19 to $3.62 the day after the incident.

The CETUS token is not doing any better. Due to the incident, it is down 5% today and more than 17% in the past week. It is trading at $0.1640 at press time.

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