VeChain Pushes Back Against Bybit’s Fund Freeze Claims, Cites Misinterpretation

• VeChain rejects ByBit’s claims while stressing that past blocklist action was a single theft response.
• Audits affirm that no built-in fund freeze tool exists, only validator-led block checks.

A heated dispute has emerged between VeChain and Bybit after a new report from Bybit’s Lazarus Security Lab claimed that 16 major blockchains have built-in mechanisms to instantly freeze user funds. The report listed BNB Chain, VeChain, and Sui as among the affected.

Bybit alleged that VeChain uses permanent hardcoded blacklisting, first applied in 2019, implying that the system could permanently freeze wallets. VeChain quickly rejected the claim on X, stating that it “does not and has never operated a ‘hidden’ fund freezing feature on its protocol.”

The firm called the study “factually incorrect and reputationally damaging.”

The company clarified that the 2019 case cited by Bybit involved a one-time community-approved response to a theft, not a built-in freeze mechanism. According to VeChain, the blocklist was used to protect the ecosystem after a single wallet was compromised through a stolen private key.

Source: X

Clarifying the 2019 Incident and Governance Actions

In December 2019, a VeChain wallet was compromised, resulting in the theft of funds. To limit further loss, the community approved a temporary measure to block the addresses tied to the theft. Independent validators updated their node software to stop any transactions connected to those wallets.

During this process, no funds were seized, and none were transferred. Validators chose not to confirm transactions from the blacklisted wallets, which prevented the stolen 727 million VET from being sold. The action was done openly through on-chain governance, and the tokens were later burned with full support from the community.

VeChain stated that the protocol does not include any function that allows a single party to seize or freeze funds. The system is built on community consensus and the actions of validators rather than any central authority. The company said,

We would like to encourage the author of the report to do a deep dive into the technical differences between blocking and freezing, and then consider the implications of getting the two mixed up in a public forum.

Independent Audits and Reviews Back VeChain

The platform stated that VeChainThor’s software includes consensus-level checks that allow validators to pause transactions if the community approves. Independent audits have confirmed several times that Vechain does not create any secret freezing mechanism.

The ICC Group’s “Galactica Security Assessment” report, which was completed on May 6, 2025, identified two issues. Both have been fixed. One involved transaction priority, and the other involved the chance of a division by zero. The audit team noted that the code was written in a clear way and followed safe practices. They suggested increasing node diversity to strengthen the network.

In May 2025, an audit by Coinspect confirmed that the platform uses a consensus-level blocklist that only activates when approved by its governance structure. Hacken’s review of VeChain from 2023 to 2024, covering account abstraction and marketplace-as-a-service features, reported no major threats and gave the project a 10/10 security rating.

Meanwhile, VeChain’s VET token is trading at $0.01683, down 2.18% over the past day. Daily trading activity has fallen 43% to $50.27 million, reflecting the general response to the controversy surrounding Bybit’s report.