Bybit’s Lazarus Security Lab has released a report revealing that 16 blockchain networks are technically capable of freezing or restricting user funds. The study examined 166 networks using a combination of AI-driven analysis and manual review, highlighting potential risks to decentralization.
Among the networks identified, Binance-backed BNB Chain, VeChain, Chiliz, Viction, and XinFin’s XDC Network feature hardcoded freezing functions embedded directly in their source code. Meanwhile, Aptos, Eos, and Sui rely on configuration file-based freezing, managed through files such as YAML, ENV, or TOML, typically accessible only to validators, core developers, or foundations.
Heco, also known as Huobi Eco Chain, was the only network to implement fund restrictions through an onchain smart contract, according to the report.
Three main freezing methods
Bybit’s research categorized fund freezing mechanisms into three types:
- Hardcoded freezing or public blacklist – directly implemented in the blockchain’s source code.
- Config-based freezing or private blacklist – controlled via local files accessible to trusted parties.
- Onchain smart contract freezing – managed through programmable contracts on the blockchain.
The report emphasized that 10 out of the 16 networks utilize config-based freezing, allowing validators and core teams to restrict transactions, while five networks rely on hardcoded methods.
Potential future freezing in Cosmos and decentralization implications
The report also noted 19 blockchains, including Cosmos-based networks, that could adopt freezing capabilities with minimal protocol modifications. Specifically, module accounts in Cosmos, controlled by module logic rather than private keys, could potentially restrict transactions. Bybit warned that implementing such functionality would require a hard fork and minor code changes, such as edits to the anteHandler file.
These mechanisms, even when intended for security purposes, raise questions about censorship and centralized control in blockchain systems.
The findings come months after Bybit experienced a $1.5 billion cold wallet hack, one of the largest in crypto history. Coordinated efforts with partners such as Circle, Tether, THORchain, and Bitget enabled the freezing of $42.9 million in exploited funds, while mETH Protocol recovered nearly $43 million in cmETH tokens.