Decentralised exchange ThorChain processed $5.4 billion in swaps since February, earning $5 million in fees. Meanwhile, blockchain analysts linked this activity to North Korea’s Lazarus Group, which allegedly laundered $605 million of Bybit’s stolen $1.4 billion through the protocol. The surge highlights Thor’s rising influence and ethical dilemmas surrounding it.
Bybit’s Record-Breaking Hack
On February 21, hackers drained $1.4 billion from centralised exchange Bybit, marking crypto’s largest-ever theft. Blockchain security firms swiftly attributed the attack to Lazarus Group, a North Korean state-backed entity. By March, the group had funnelled over half the stolen Ethereum through ThorChain, exploiting its cross-chain swaps to obscure trails.
THORChain Processes $5.4B as Illicit Funds Flow
Post-hack, ThorChain’s swap volume skyrocketed, hitting $1 billion daily at its peak. Following this, the protocol raked in $5,54,000 in fees on February 27 alone. Despite criticism, its cumulative revenue surpassed $5.5 million by March. Analysts warn such volumes risk normalising ThorChain as a haven for illicit transactions.
Developer Exodus
Tensions flared on February 27 as core developer “Pluto” resigned after ThorChain reversed a vote to block Lazarus-linked wallets. “I will no longer contribute,” Pluto declared, criticising the protocol’s refusal to adopt compliance tools like Elliptic’s analytics. His departure underscores growing rifts between decentralisation ideals and regulatory pressures.
Crypto Community Slams Thorchain’s “No-KYC” Stance
Critics blasted ThorChain for enabling the Lazarus laundering spree. “No KYC, no off-switch; it’s built for criminals,” argued crypto commentator Yogi on March 4. Others noted rivals like Tornado Cash implemented wallet freezes without centralisation. ThorChain defended its design, citing immutable smart contracts as foundational to DeFi’s ethos.
Bybit CEO Confirms $280M Laundered
Bybit CEO Ben Zhou confirmed on March 4 that $280 million of stolen funds had gone untraceable. Meanwhile, ThorChain continues to attract users with fast swaps and 50+ liquidity pools. Its daily volume remains above $200 million, proving resilience despite the scandal.
Is Accountability DeFi’s Next Chapter?
Thorchain’s saga underscores DeFi’s tightrope walk between innovation and responsibility. While its technology thrives, the protocol faces mounting calls to integrate compliance without sacrificing decentralisation. As regulators circle, the industry watches: Can DeFi outpace its critics or will scandals like Bybit’s hack redefine its future?
