VeChain Denies Bybit’s Explosive ‘Hidden Freeze’ Claim: 2019 Blocklist Wasn’t a Secret Kill Switch

VeChain clarifies that the 2019 blocklist action was a one-time, community-approved response.

VeChain has issued a firm statement denying recent allegations made in a report published by Bybit’s Lazarus Security Lab, which claimed that the blockchain contains a hidden feature that allows funds to be frozen.

In a statement released Thursday, VeChain categorically rejected the claims as “factually incorrect and reputationally damaging.”

VeChain criticizes Bybit’s research lab

In its recent post on X, the team addresses the specific allegations explained that the only incident resembling such an action occurred in December 2019, when a private key theft compromised a single VeChain wallet. Following the breach, the VeChain community voted to implement a one-time, community-approved blocklist to prevent the liquidation of the stolen assets.

Validators upgraded their node software to reject transactions originating from the thief’s wallet and ensure that the stolen funds could not be moved or reallocated. The measure, VeChain clarified, was a transparent, governance-driven response to a major security event and not a unilateral freeze of funds embedded in the protocol’s source code.

The company further explained the technical distinction between “blocking” and “freezing,” while criticizing the Bybit report for merging validator-level inclusion policies with hardcoded freezing capabilities.

“We encourage the report’s author to conduct a deeper technical investigation to understand the implications of mixing these two mechanisms in a public forum.”

VeChain also pointed out that independent audits, including those from NCC Group, Coinspect and Hacken, have confirmed that VeChainThor’s software allows validators, through community-approved governance, to deny certain transactions but not to seize or freeze assets. The blockchain’s consensus-level controls are designed to support decentralized decision-making rather than centralized control, VeChain added.

Bybit’s research

Bybit’s Lazarus Security Lab report, titled “Blockchain Freezing Exposed: Examine the Impact of Fund Freezing Ability in Blockchain,” claimed that 16 major blockchain networks have features that allow developers or validators to freeze or restrict user funds. According to the report, VeChain was among a number of networks, including Binance-backed BNB Chain, Sui, Aptos, and XinFin’s XDC Network, that are reported to have hardcoded freezing mechanisms embedded directly into their source code.

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The study, which examined 166 blockchain networks using AI-assisted code analysis and manual verification, identified three primary categories of freezing mechanisms: hardcoded freezing, configuration-based freezing, and on-chain contract freezing.

The report cited multiple historical examples of fund freezing, including Sui freezing $162 million in stolen assets after the Cetus hack, and BNB Chain deploying hardcoded blacklists to contain a $570 million bridge exploit. Researchers concluded that while such interventions can help limit the damage from security breaches, they also raise concerns about centralization and censorship. It said the existence of fund freezing features, even if implemented for security purposes, calls into question the idea of ​​complete decentralization.