Blockchain Freezing Exposed: A Look into User Fund Control on Major Networks

In a groundbreaking report by Bybit’s Lazarus Security Lab titled “Blockchain Freezing Exposed,” it has been revealed that 16 major blockchains possess capabilities to freeze or restrict user funds. The report dives deep into how these blockchain networks execute controls over transactions in instances of hacks or security breaches, raising vital questions regarding transparency and security in the burgeoning cryptocurrency landscape.

Understanding Fund Freezing Mechanisms

The research encompassed a thorough examination of 166 blockchains using advanced AI and manual inspections, revealing that 16 networks already have fund-freezing capabilities embedded in their systems. Additionally, another 19 networks could potentially adopt similar mechanisms with relatively minor protocol alterations. The report categorizes freezing mechanisms into three primary levels: hardcoded freezing, established by the blockchain code itself; setting-based freezing, determined by validators or system configurations; and on-chain freezing of contracts, facilitated through system contracts.

Case Studies: Sui Aptos and BNB Chain

Real-world incidents starkly illustrate how these fund-freezing mechanisms are operationalized. A notable incident occurred in May 2025 when Cetus, a decentralized exchange on the Sui blockchain, suffered a massive $223 million hack due to a vulnerability in its math library. In a swift response, the Sui validators and network foundation collaborated to freeze $162 million, effectively mitigating further losses. The Sui community later voted overwhelmingly to recover the frozen funds, showcasing blockchain governance in action.

Meanwhile, Aptos, also utilizing the Move programming language for secure smart contracts, introduced cooling measures post-Cetus hack to prevent future occurrences. In July 2025, it released the TransactionFilter tool, enabling validators to block transactions from potentially harmful sources, further affirming the growing emphasis on user protection in blockchain technology.

Historic Examples of Freezing Powers in Action

The BNB Chain offers another case study in fund freezing. In October 2022, hackers exploited a vulnerability in the network’s IAVL tree proof system, leading to the issuance of 2 million BNB and a staggering loss estimated at $570 million. As a damage control measure, the network halted operations and eventually blacklisted the attacker’s wallet, freezing stolen coins and restoring some level of stability to the platform. This incident marked one of the first protocol-level fund freezes within the industry and demonstrated the necessity for rigorous security protocols in blockchain operations.

VeChain emerged as a pioneer in this realm, having executed its first asset freeze in 2019 following a $6.6 million theft. The report suggests that Cosmos, with its modular architecture, could similarly integrate fund-freezing capabilities in the future, illustrating an ongoing shift toward more responsive and security-focused systems across blockchain networks.

Advocating for Transparency in Blockchain Governance

As highlighted by David Zong from Bybit, the pressing need for transparency around fund-freezing capabilities cannot be overstated. In an environment fraught with security threats—evidenced by the recent Balancer hack that siphoned $129 million across Ethereum, Base, and Berachain—clear communication regarding the tools and measures used to safeguard user assets is vital for fostering trust and maintaining effective governance in blockchain networks.

This urgency for transparency becomes even more pronounced against the backdrop of evolving security challenges within the decentralized finance (DeFi) sector. The exploit which allowed hackers to instantly swap liquid staking tokens for ETH underlines the necessity for enhanced security protocols and the vigilance required to protect user funds.

Conclusion: The Future of Blockchain Security

In summary, Bybit’s report sheds light on the critical need for robust fund-freezing capabilities in the face of rampant security breaches and exploits occurring across the industry. As cryptocurrency continues to intersect with traditional financial systems, the complexities of more dynamic governance structures become apparent. Networks must balance user control and the necessity of intervention during security incidents. The call for increased transparency and robust security measures becomes more imperative in protecting users against potential threats, ultimately fostering a more secure and trust-driven blockchain ecosystem.

The future of blockchain security lies in fostering innovation while remaining steadfast in governance practices that prioritize user protection. It’s essential for network developers to navigate this balance carefully and transparently to ensure long-term viability and trust in the cryptocurrency landscape.