Blockchain can freeze your funds, how?

Jakarta, Pintu News –The use of blockchain technology, which is considered a bastion of security and privacy, turns out to have loopholes that can be alarming. A recent study by Bybit’s Lazarus Security Lab revealed that there are 16 major blockchains that have the ability to freeze users’ funds without their consent. This finding raises serious questions about how “decentralized” this technology really is.

Shocking Discoveries from Research

The study, which analyzed 166 blockchain networks, found that in addition to the 16 blockchains that already have freezing capabilities, there are 19 others that could enable similar powers with minor code modifications.

This suggests that many supposedly decentralized networks actually have central controls similar to the traditional banking system. Traders who previously believed that their crypto assets were safe from the reach of institutions are now faced with a different reality.

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Fund Freezing Method

There are three methods used by blockchain foundations to freeze user assets. The first method is hard-coded freezing, where the blacklist is directly integrated into the blockchain code, as used by BNB Chain and VeChain.

The second method is configuration-based freezing that operates through private validator settings, allowing foundations to add addresses to a local blacklist file that is not visible to the public. The third method, used by Huobi ECO Chain, is blacklist management through on-chain smart contracts.

Real World Intervention and its Implications

The research documents several major incidents where blockchains used their freezing powers. For example, Sui froze $162 million after the Cetus DEX hack and then used governance votes to return funds to victims.

BNB Chain and VeChain have also used this feature to restrict the movement of actors after fund leaks. These events show how quickly blockchain networks can adopt centralized controls in response to a crisis.

Conclusion

This report not only reveals the risks of centralization in a supposedly decentralized technology, but also raises trust concerns for traders. While freezing funds can prevent large amounts of funds from being stolen, it proves that foundations have the ability to overcome the principle of censorship resistance that is a key selling point of crypto.

The balance between legitimate security needs and the principle of decentralization is becoming increasingly important as institutional adoption grows and regulatory pressure builds.

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FAQ

• What is blockchain?
  • Blockchain is a distributed digital information recording technology typically associated with cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH), which enables transparency and data security without the need for a third party.
• Why is the ability to freeze funds on the blockchain an issue?
  • The ability to freeze funds challenges blockchain’s basic tenets of censorship resistance and decentralization, giving the foundation similar powers to banks to control users’ assets.
• Which blockchains have the ability to freeze funds?
  • Some blockchains that have this capability include BNB Chain, VeChain, and Huobi ECO Chain. They use methods such as hard-coded blacklists and validator-based configuration.
• How have fund freezing incidents been used in practice?

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• What are the long-term implications of blockchain’s ability to freeze funds?
  • While helpful in emergency situations, this capability raises concerns about centralization and could affect user trust as well as the decentralization philosophy that many blockchain networks are based on.

Reference

• AMB Crypto. 16 Blockchains Can Freeze Your Funds: Bybit Report. Accessed on November 14, 2025