A shocking new report from Bybit’s Lazarus Security Lab has uncovered a chilling truth:
Sixteen major blockchain networks — including some of the most trusted names in crypto — can freeze user funds directly at the protocol level.
This discovery challenges one of cryptocurrency’s founding principles: true financial freedom and decentralization.
🔍 The Paradox of Decentralization: When “Your Crypto” Isn’t Entirely Yours
When Bitcoin launched in 2009, it promised financial sovereignty — a world without middlemen or gatekeepers. But over a decade later, Bybit’s groundbreaking analysis of 166 blockchains reveals a darker reality.
Many modern networks, while marketing themselves as decentralized, have quietly embedded fund-freezing mechanisms into their core protocols.
According to the report, major players like BNB Chain, Sui, Aptos, VeChain, Chiliz, Viction (VIC), XDC Network, and HECO Chain all possess the ability to lock user funds without user consent.
“Blockchain was built on decentralization, yet many networks are now developing centralized safety switches,”
— David Zong, Head of Group Risk Control and Security, Bybit.
⚙️ The Three Hidden Ways Your Funds Can Be Frozen
Bybit’s researchers identified three main mechanisms that allow blockchains to take control of user funds — each with varying levels of centralization.
1. Hardcoded Freezing
Built directly into the blockchain’s source code, this irreversible method allows network operators to halt or block addresses permanently.
Used by: BNB Chain, VeChain, Chiliz, Viction, and XDC Network.
2. Configuration-Based Freezing
This stealthy approach lets validators or core developers activate freezes via private configuration files — without community approval.
Used by: Ten networks, including Sui and Aptos.
3. On-Chain Contract Freezing
In this method, special smart contracts control blacklists and freezing permissions. While more transparent, it’s still centrally governed.
Used by: HECO Chain.
💥 Real-World Examples: When Blockchains Hit the Freeze Button
These “safety features” aren’t just theoretical. They’ve already been used — sometimes saving millions, sometimes raising ethical concerns.
- Sui Network froze $162 million in stolen assets after the Cetus hack.
- BNB Chain halted transactions during a $570 million bridge exploit, preventing further theft.
- VeChain froze $6.6 million in stolen tokens in 2019 after its foundation wallet was compromised.
- Aptos recently introduced blacklist functions for emergency response.
These incidents show both sides of the coin — security vs. decentralization.
⚠️ 19 More Blockchains Could Add Freezing Powers Next
The investigation didn’t stop at the 16 networks already affected. Bybit’s team found 19 more blockchains that could add freezing capabilities with minimal updates — a sign this might become a new industry norm.
Notably, Cosmos and other modular blockchains could activate these powers with little effort, raising alarms about how “mutable” decentralization has become.
🧩 Why Developers Are Adding Freeze Functions
Developers justify these features with several key arguments:
1. Regulatory Compliance
To align with global AML (Anti-Money Laundering) and compliance standards, networks are building mechanisms that let them act quickly on legal orders.
2. Emergency Security
After billion-dollar hacks, many argue that the ability to freeze assets is necessary to protect investors and contain damage.
3. Institutional Adoption
Financial institutions often demand centralized control options before adopting blockchain systems.
4. KYC Integration
Some networks incorporate freezing tools as part of KYC-driven compliance frameworks to appease regulators and institutional partners.
🟢 The Blockchains That Stayed True to Decentralization
Despite the growing centralization trend, Bitcoin and Ethereum remain fully decentralized.
Bybit’s report confirms these two networks lack any protocol-level freeze function, making them stand out as true embodiments of blockchain independence.
However, even they may face future regulatory pressure that could force governance changes down the line.
📢 Bybit’s Call for Transparency in Blockchain Governance
Bybit’s Lazarus Security Lab isn’t just exposing vulnerabilities — it’s demanding accountability.
“Blockchain projects must clearly disclose their ability to intervene in user funds,”
— Bybit Lazarus Security Lab Report.
The researchers urge networks to publicly document:
- When freezing powers can be used
- Who controls these functions
- What governance processes exist for activation
Transparency, they argue, is key to rebuilding user trust.
💡 What Crypto Investors Should Do Now
If you hold crypto, these findings should influence how you choose and use networks. Here’s how to protect yourself:
- Research the blockchain’s governance – Read whitepapers and documentation for hidden control mechanisms.
- Evaluate the trade-off – Some blockchains prioritize safety and compliance over freedom; decide what matters more to you.
- Diversify your holdings – Spread your portfolio across different architectures to reduce systemic risk.
- Stay alert – Follow updates from your favorite networks and regulatory developments that may affect your funds.
🔮 The Future of Blockchain: Between Freedom and Control
The Bybit report paints a picture of a blockchain world in evolution — from pure decentralization to hybrid governance.
Sixteen major blockchains now have the power to freeze funds. Nineteen more are just one update away.
This doesn’t mean crypto’s ideals are dead — but it does mean users must demand transparency.
As the industry matures, the defining question will be:
Can blockchains balance security and regulation without betraying decentralization’s core promise?
Sources:
Bybit Lazarus Security Lab | CoinTelegraph | Crypto.News | DLNews | Forklog | CryptoRank | WazirX Blog | CoinLaw