Bybit’s researchers identified three categories of freezing mechanisms:

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Hardcoded Fund-Freezing Functions

Blockchains where the protocol itself includes code that can block a wallet or halt transactions.

Affected chains include:

• BNB Chain

• VeChain

• Chiliz

• Viction

• XDC Network

These networks rely on logic embedded directly into the source code, meaning freezes can occur at the protocol level.

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Configuration-Based Freezes

Here, validators or foundations can freeze accounts using editable config files (YAML, ENV, TOML).

Examples include:

• Aptos

• EOS

• Sui

This makes freezing quick and invisible to users since it doesn't require code changes.

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On-Chain Smart Contract Freezes

Only one chain uses this approach:

• Heco Chain

It performs freezes through a smart contract-managed blacklist.

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What This Means for Decentralization

Bybit highlighted a central issue:

The discovery forces a tough conversation in the crypto community:

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The Great Debate: Security vs. Decentralization

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Arguments FOR freezing mechanisms

Supporters say freeze functions help:

• recover hacked assets

• follow court orders

• prevent money laundering and terrorism financing

• protect users from fraud

Due to increasing crypto-related crime, these tools are often seen as necessary.

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Arguments AGAINST freezing mechanisms

Critics warn these features:

• create centralized choke points

• allow arbitrary censorship

• weaken trust in blockchain immutability

• mean the chain is no longer permissionless

• introduce “kill switch” risks

Once the function exists, it can be abused — even if unused today.

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19 More Blockchains Could Add Freezing With Minor Tweaks

Bybit discovered 19 additional blockchains capable of enabling freezes with small protocol changes.

Many of these are based on the Cosmos ecosystem, which uses module accounts (addresses governed by chain logic instead of private keys). These could theoretically freeze wallets after a hard fork.

No Cosmos chain uses this ability yet — but the capability exists.

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Why This Research Matters Now

Bybit released the report shortly after experiencing a $1.5B cold wallet breach, one of the largest hacks in crypto history.

Thanks to coordinated freezes across multiple networks, partners recovered part of the stolen funds:

• $42.9M frozen by Circle, Tether, THORchain & Bitget

• $43M recovered by mETH Protocol

This showed both sides of the debate:
✔ freezing tools helped retrieve funds
✖ but also proved how centralized some networks already are

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Call for Transparency

The report concludes with a simple recommendation:

Users deserve to know whether the networks they rely on can halt or seize funds.

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Summary

Here’s the core takeaway:

Crypto cannot be both fully decentralized and centrally moderated — at some point, networks will have to choose.