Cetus Protocol, the foremost decentralized exchange (DEX) on the Sui blockchain, has secured a loan from the Sui Foundation to fully compensate users after a recent exploit that resulted in a loss of $223 million.

What to know:

• Cetus Protocol has obtained a loan aimed at reimbursing users after a $223 million exploit that occurred last week.
• The incident involved an attacker using spoof tokens to dupe the system, leading to the draining of genuine assets from liquidity pools, with an estimated $162 million in tokens currently frozen on-chain.
• The DEX intends to disburse compensation to the affected users immediately, utilizing the new loan along with its reserves while awaiting a community vote to potentially use the frozen funds for complete recovery.

Cetus has stated that through this secured loan and its assets, they are positioned to fully recover stolen assets if the community agrees to release the locked funds. Ultimately, the recovery process will depend on a pending governance proposal that could allow the use of these frozen assets to facilitate user reimbursements.

“Using our cash and token treasuries, we are now in a position to fully cover the stolen assets currently off-chain if the locked funds are recovered through the upcoming community vote,” Cetus remarked in a post on X (formerly Twitter).

“This includes a critical loan from the Sui Foundation, making a 100% recovery for all affected users possible.”

The exploit last week involved manipulation of spoof tokens, such as BULLA, to exploit vulnerabilities in price curves and reserve logic, allowing the perpetrator to drain SUI, USDC, and various other actual assets from liquidity pools without providing the equivalent in return.

At one point, over $162 million in stolen tokens were secured on-chain, while the rest were moved through various channels. The wallet of the attacker, which remains active, was observed retaining more than 12.9 million SUI, with indications that some assets may have already been swapped or hidden across networks.

In response to the exploit, Cetus paused its smart contracts to investigate the issue, resulting in a nearly 40% drop in the trading value of its governance token, CETUS. Liquidity concerns plagued the Sui DeFi ecosystem, which faced increased scrutiny regarding protocol safety.

Now, with the assistance of the new loan from the Sui Foundation, immediate reimbursements to users can commence.