VeChain Sets Record Straight on Backdoor Blacklisting Allegations from Bybit

VeChain has firmly rejected claims that it has hidden “backdoor” features to freeze user funds. The disclosure follows a report from Bybit’s Lazarus Security Lab, published on November 12, 2025. The report specifically mentioned that VeChain has a hidden capability to block or pause user assets in the event of a hack.

As Bybit calls for more transparency, VeChain emphasizes the need for thoughtful discussions on how to balance innovation with user control, which could change governance standards across major networks.

The Bybit Report  

Bybit’s Lazarus Security Lab released a report yesterday addressing claims of decentralization following an increase in hacking incidents. Its researchers used an AI tool to check the code for blocklisting modules and transaction filters. They found hardcoded issues in five networks, including VeChain and BNB Chain.

The report was based on an incident that occurred in December 2019, in which private keys from a VeChain wallet holding 727 million VET were stolen. To stop further theft and recover funds, the network blocked 469 addresses. The action recovered most of the stolen funds without causing wider issues. Bybit pointed to this as an example of early protocol-level responses against hacks that undermine decentralization. 

VeChain Issues Firm Rebuttal

The VeChain Foundation has maintained that Bybit’s report incorrectly mixed up blocking and freezing, which wrongly associates it with centralized chains. The blockchain firm clarified the origins and purpose of its mechanism. Further, officials explained that it is a public tool for managing crises, not a hidden backdoor. 

It added that the 2019 blocklist was developed in collaboration with authorities and announced through official channels. This emphasizes that the mechanism was a one-time use and was committed to maintaining the system’s integrity. The VeChain Foundation has condemned Bybit’s report, labelling it false.

“Reports based on ByBit’s allegations that VeChain operates a “hidden” freezing function are false….As proponents of transparency & community governance, VeChain does not, and never will have such a function.”

Sunny Lu, VeChain’s founder, earlier showed his displeasure with Bybit’s report on X.

It’s irresponsible report without through investigation – it was consent with governance to block hacker addresses who stole the private key of a wallet.

There are difference to freeze or block based governance.

Ethereum was rolled back after TheDAO hacking also based on… https://t.co/6ZsG06w9Lu pic.twitter.com/p1tjsmHOWR

— Sunny LU @VeChain (@sunshinelu24) November 12, 2025

Meanwhile, VeChain’s collective response has sparked discussions on X, with some users praising the firm for successfully recovering assets, viewing it as a positive development for investors.

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