A new report from Bybit’s Lazarus Security Lab has revealed that 16 major blockchain networks have built-in features that allow developers or validators to freeze or restrict user funds, raising questions about the true level of decentralization in these systems.
The report, published on Tuesday, analyzed 166 blockchain networks using AI tools and manual code reviews. It found that well-known networks such as BNB Chain, VeChain, Chiliz, Aptos, and XinFin’s XDC Network have hardcoded or configurable “kill switches” that can block transactions or wallets.
According to the report, these freezing mechanisms fall into three categories: hardcoded, configuration-based, and on-chain contract-based. Ten of the affected blockchains rely on private configuration files accessible only to validators or foundations. Others, including BNB Chain, embed the freezing function directly in their source code, while Heco Chain uses smart contracts for blacklisting wallets.
Bybit’s researchers warned that such control functions, even when designed for security purposes, undermine the idea of a fully decentralized blockchain.
“The existence of fund-freezing functions challenges the notion of full decentralization,” the report stated.
The Lazarus team also identified 19 more networks that could easily introduce similar freezing tools with small protocol updates. Many of these belong to the Cosmos ecosystem, which uses “module accounts” that could, in theory, be modified to freeze user addresses.
The findings have reignited debate within the crypto industry over the balance between security and decentralization.
Supporters argue that these features help recover stolen assets and prevent fraud, while critics say they create centralized control points that go against blockchain’s founding principle of censorship resistance.
The timing of Bybit’s report is significant, coming months after the exchange’s $1.5 billion cold wallet hack, during which several companies cooperated to freeze $42.9 million in stolen funds. While that recovery highlighted the usefulness of such powers, it also exposed how centralized the process of freezing assets has become across supposedly decentralized networks.
Bybit’s report stops short of recommending new rules but calls for greater transparency, urging blockchain projects to disclose any fund-freezing functions openly.
