Bitcoin Climbs While Crypto Security Cracks: Lessons from Coinbase and Cetus

In a week when Bitcoin soared to a new all-time high, signaling renewed optimism and momentum across the crypto market, alarming cracks began to show beneath the surface. While investors celebrated historic gains, two major security breaches, one targeting Cetus Protocol on the Sui blockchain and the other involving Coinbase, served as a stark reminder that even in bullish times, vulnerabilities in the crypto ecosystem persist. These incidents, involving over $200 million in stolen assets and compromised data, have reignited urgent questions about how secure both DeFi and centralized platforms really are.

What Happened: Breakdown of the Hack

The hack targeted Cetus Protocol, a DEX that had quickly become a central pillar of Sui’s DeFi landscape. In the early hours of the morning, an attacker exploited a vulnerability in Cetus’s automated market maker (AMM) system, manipulating token valuations and draining liquidity pools. Initial estimates put the losses at over $200 million, with some sources suggesting the total damage could exceed $260 million.

Panic selling ensued almost immediately. Within hours, the SUI token and other Sui-based assets experienced steep declines, with some losing more than 75% of their value. The incident left developers, investors, and analysts scrambling for answers and demanding accountability from the teams behind the affected protocols.

How the Hacker Exploited Cetus

The exploit was both technically complex and strategically precise. At the core of the attack was the creation of spoof tokens, digital assets designed to mimic legitimate ones on the Sui blockchain. The attacker introduced these fake tokens into Cetus liquidity pools, which rely on automated price curves to determine exchange rates between tokens.

By manipulating the liquidity pools with these counterfeit tokens, the attacker was able to distort the AMM’s pricing mechanisms. The fake tokens were treated by the protocol as if they held legitimate value, allowing the attacker to withdraw real assets, such as USDC and SUI, in exchange for essentially worthless tokens. This exploit was exacerbated by a critical oversight in the smart contracts governing Cetus, which failed to properly verify the legitimacy or reserve backing of the assets being traded.

The result was a rapid draining of some of the platform’s most valuable liquidity pools. The largest SUI/USDC pool was among those targeted, leading to immediate price dislocations and cascading losses across the DEX.

Where the Money Went: Tracing the Stolen Funds

In the hours following the attack, the perpetrator began moving the stolen funds with remarkable speed. A large portion of the assets (over $60 million worth of USDC) was quickly bridged to Ethereum, where the funds were converted to ETH. On-chain analysts have tracked additional sums still being laundered across various wallets and protocols, with the attacker actively working to obfuscate their tracks.

At one point, the attacker’s primary wallet was observed holding over $130 million in SUI tokens alone, suggesting that much of the loot remains in circulation. Efforts are underway by blockchain security firms and compliance experts to monitor and freeze any assets that might pass through regulated exchanges, though the decentralized nature of these transfers makes recovery a formidable challenge.

Immediate Fallout and Market Impact

The impact of the breach on the SUI ecosystem was swift and severe. In the immediate aftermath, the price of the SUI token plummeted to approximately $4.01, with some data showing it briefly touching lows near $3.90. Trading volumes for SUI surged by more than 35% within hours, as panic sellers rushed for the exits and opportunistic buyers attempted to catch what they hoped was a temporary dip.

Technical indicators reinforced the market’s unease. The Relative Strength Index (RSI) for SUI dropped to 28, indicating heavily oversold conditions. Meanwhile, the Moving Average Convergence Divergence (MACD) revealed a sharp bearish divergence, underscoring the intensity of the sell-off.

The disruption wasn’t limited to SUI alone. Other tokens traded on Cetus, many of which rely on the protocol for liquidity, experienced massive losses. In some cases, token prices collapsed by more than 80%, wiping out millions in user value and eroding trust in Sui’s growing DeFi ecosystem.